Corestate Capital sells further repositioned portfolio for €83m

Switzerland-based Corestate Capital, which largely focuses on opportunistic residential real estate in Germany, continued its long series of disposals by selling a further 2,360 units – this time to a listed (unnamed) international institutional investor, for a price of €83m. This brings to over €1bn the revenue raised from sale by the company in the last two years.

The properties are located in the German states of North Rhine-Westphalia and Mecklenburg-Western Pomerania, and were acquired from a distressed seller in early 2010.

Typical for Corestate’s “repositioning” approach, when it bought the properties they had a significant maintenance backlog, high vacancy levels and a poor rent roll. By restructuring the funding, committing heavy capital expenditures to redevelopment, and actively managing the assets, Corestate says it lowered the vacancy rate from 14 % to 7 % and cut the delinquency rate from 15 % to 5 %.

Thomas Landschreiber, Corestate’s CIO, commented: “We focus on creating value in real estate as opposed to passive buy-and-hold strategies. Our asset management platform covers the entire spectrum of real-estate-related deliverables, which made it possible for us to stabilise this distressed portfolio within four years and to successfully reposition it on the market.

 “Given the persistently upbeat sentiment on the German investment market, the comparatively moderate entry-level investment volumes, and the low rate of interest on the capital market, real estate investments in Germany remain an interesting proposition”, he said.

Since its establishment in 2006 by ex-Cerberus staff under the leadership of Ralph Winter, Corestate has invested more than €3bn in Germany for international investors and family offices. Two years ago it opened a further office in Singapore to tap into Asian capital sources looking to invest in Europe, in addition to offices in Zug, Frankfurt and London.