LEG buys 700 units from Benson Elliot’s old Speymill stock

Benson Elliot, the UK-based private equity real estate fund manager, said it sold 700 units from its German residential portfolio to German listed investor LEG Immobilien, at a rental yield of 6.8%.

The properties sold to LEG are all located in North-Rhine Westphalia, as are all the properties owned by the former municipally-owned LEG prior to its successful flotation threee years ago.

The properties make up part of the Tor portfolio of the now defunct Speymill Deutsche Immobilien plc, which originally encompassed more than 3,000 residential and commercial units across 80 multi-family properties throughout Germany, but mainly in Berlin, Frankfurt, Munich, Hamburg and Cologne.

The Speymill portfolio, which secured a €187m loan, was bought by Benson Elliot out of an Isle-of-Man receivership in 2012, in a process directed by special servicer Hatfield Philips International and receiver Ernst & Young, in conjunction with the borrower.

Benson Elliot’s purchase of the Tor portfolio represented one of the first defaulted CMBS portfolio loans to be resolved in the aftermath of the global financial crisis.

Since acquisition, Benson Elliot and joint venture partner Wertgrund Immobilien have undertaken a number of asset management initiatives including the implementation of a capex programme, raising the occupancy rate across the portfolio from 90% to 97% and signing more than 1,000 new leases.

Following this latest disposal, Benson Elliot said it has realised well over €200m of disposal proceeds from the Tor investment, exiting 69 of the original 80 assets and distributing investors more than 150% of invested capital.

'We have seen strong income and capital growth across the Tor portfolio since we acquired it some three years ago,' said Georg Strassner, principal and co-head of Germany at Benson Elliot. 'We were confident at the time of purchase that quality residential assets like these – once stabilised – would prove attractive to buyers seeking reliable income in a low interest rate environment. We’ll look to wind down the remaining assets in the near term, crystallising the remaining value.'

Meanwhle, the listed LEG Immobilien raised first quarter FFO by 25% to €51m mainly due to rental and portfolio growth. It expects €195m-€200m FFO for 2015 without taking into account further acquisitions.

The company boosted rental income by 13.8% to €107m in the first three months, due to a larger portfolio as well as like-for-like rental growth of 2.5% per sqm. Its EPRA vacancy remained stable at 3.2% but it aims to raise occupancy to at least 97.2% by year-end. So far this year, the firm has bought 800 residential units and is close to signing on another 2,500 - on track to achieving its stated acquisitions target of at least 5,000 units this year.

According to CEO Thomas Hegel, “The organic rental growth proves our operating strength and the value-oriented expansion of our portfolio is progressing. We intend to consistently pursue this value-generating growth strategy in the future.” LEG now holds about 110,000 apartments across North Rhine-Westphalia.