Largest Czech deal seen as German funds continue to target logistics

In the largest deal in the Czech Republic this year, German savings bank central investment company Deka Immobilien has acquired a logistics portfolio in the Czech Republic from commercial real estate developer CTP group.

It also launched a new institutional fund, Deka Immobilien Fokus Logistik Tschechien, to hold part of the assets, while allocating other of the assets to its Deka-Immobilien Europa and WestInvest TargetSelect Logistics sector fund.

“The transaction volume of €460m places the deal amongst the largest ever real estate transactions in the Czech Republic. This long-term cooperation established between CTP and Deka will give continuity of service to our business partners in the logistics parks,” said Michal Felcman, head of mergers and acquisitions at Deka Immobilien.

Including two development projects, the portfolio contains 36 modern buildings fully occupied by more than 50 well-established tenants, with a total leasable area of around 430,000 sqm. The portfolio also includes two large industrial parks, CTPark Teplice and CTPark Plzen, which contain a mix of logistics and light industrial properties.

CTP Group, the leading Czech project developer and holding company for logistics and industrial real estate, will continue to manage and operate the portfolio for ten years under the CTPark network brand.

“We selected Deka as our partner as we share the same strategy of long-term ownership and further development and enhancement of the properties through which we provide added value to our clients,” said Remon Vos, CEO of CTP.

“This transaction will help CTP to further invest in our business growth across the CEE region, continue to improve our facilities, increase the long-term value of our assets and ultimately deploy in new European locations,” added Richard Wilkinson, CFO of CTP Group.

DekaBank securities services provider of the German savings bank financial group, managing total customer assets of €288bn across the group. Its global real estate is held in two investment companies, Deka Immobilien Investment and WestInvest. This totaled about €34bn in assets as at 30th June 2018.

A useful new report from property advisors CBRE highlights the extent of German fund investment in Central Europe, particularly in Poland and the Czech Republic. Notable is, however, how their share of the overall transaction volume has been shrinking, currently standing at about 15% of the total invested annually. New entrants from the USA, Asia and South Africa have been increasing competition for assets in the region, while Germans seem to be consolidating their existing holdings.

According to Sean Doyle, head of investment properties at CBRE, “Due to previous numerous purchases, German investors have built large property portfolios and are now focusing on active asset management. Due to their significant investment in Poland, investors have become more selective and as a result are acquiring less assets. Nevertheless, German and Austrian funds are still the most active investors when the most expensive commercial, predominantly office buildings, are concerned. In the last 12 months three out of seven such transactions were closed with German capital.”

Paweł Dębowski, chairman of the real estate group at lawyers Dentons, said CEE is now perceived as a safe and attractive region by a growing number of property investors from the UK, US, and increasingly Asia. German investors and fund managers like Union Investment, Deka Immobilien, GLL and Warburg-HIH have been actively investing for many years, especially in the office, hotel and logistics sectors.

"Investor confidence in the region, underpinned by favorable legislation and sustainable economies, is invariably high. Poland undoubtedly holds the number one position in the region. It is seen as the most diversified and mature market in CEE, outperforming western Europe in terms of attractive yields at low risk with relatively high liquidity,” he added. The Czech Republic comes in a strong second in investor favour.