Corestate sells mixed-use German portfolio for €250m

The Zug, Switzerland-based real estate investor Corestate sold a German mixed-used portfolio earlier this month for €250m to a number of unnamed German institutional buyers. The deal followed the classical Corestate path of opportunistically buying, upgrading, repositioning, bundling, and selling into a strong market.

Corestate said it had originally acquired the portfolio in a distressed state and had repositioned it over time. During this process, the Zug-based investor invested €10m of capital in asset management activities to upgrade the condition and quality of the assets.

The portfolio comprises 3,700 commercial and residential units, put together through the acquisition of smaller distressed packages that have been bought over several years, including from foreign owners. The assets are located in different locations across North Rhine-Westphalia, Hesse, and Berlin, with a few units in Leipzig and Dresden.

”This has been a very successful transaction through which we fulfilled our business plan as forecast; decreasing the vacancy and delinquency rates in this portfolio and thereby increasing the cash flow considerably,” according to Thomas Landschreiber, Corestate's chief operating officer. “We turned distressed assets into a stable core portfolio, achieving attractive returns for our investors.”

Landschreiber added that the company intends to build up its platform even more in the near future. “We see an increased number of transactions coming to the market,” he commented. “There is increased national and international demand for stable German property, characterized by capital preservation and strong, sustainable rental cash flows.”

Corestate is currently in the process of repositioning more recent acquisitions which are undergoing similar asset management improvements. With offices in Frankfurt, Essen, London and Luxembourg, the company has invested €2bn in the German real estate market, both through direct and indirect transactions.