Patrizia absorbs new 14,000-unit residential fund
#The listed Augsburg-based Patrizia Immobilien AG has swooped again to pick up a major residential portfolio, this time persuading a group of Swedish and Norwegian investors in an off-market transaction to accept its offer for a 14,000-unit portfolio, with 13,500 of the units in Germany and the rest in Sweden. The value of the portfolio is put at €900m.
Patrizia submitted a takeover bid on April 15th to the nearly 8,400 fund owners from Norway and Sweden. By 18th May, at least 83.1% of the Norwegian and 52.5% of the Swedish fund owners had accepted the offer.
The apartment portfolio was previously held by the Swedish fund Hyresbostäder i Sverige III Gul AB. The fund is owned 67.4% by Norwegian group Boligutleie Holding III AS, while 32.6% is owned by the Swedish Hyresfastigheter Holding III Gul AB. The Scandinavian real estate fund was established in 2005 and was most recently managed by the Oslo-based Obligo Investment Management AS company.
According to Wolfgang Egger, CEO and founder of Patrizia, “There was great willingness among the fund owners to part with their units. We submitted an extremely fair offer for them… This off-market transaction demonstrates that, with its pan-European positioning, Patrizia is capable of seeking out attractive real estate investments not only through established channels.”
On the basis of 100% of equity, the gross asset value is about €900 million. Once the fund has been completely taken over and dissolved, Patrizia said it plans to offer the residential portfolio to its customers and third parties as a potential investment.
In addition to Berlin, where alone more than 5,000 apartments are located, the portfolio holdings cover Munich, Stuttgart, Frankfurt, Cologne, Dusseldorf and Hamburg, as well as several regional capitals and urban areas across western Germany. The portfolio also includes holdings of 500 residential units in Umea, in Sweden.. The residential portfolio is described as being “in good technical condition”, with a vacancy rate of less than 4%.
Launch of €600m domestic fund
Separately, Patrizia has also raised €300m in equity commitments for a new domestic commercial property fund with target investment of €600m, and also said it aims to raise full-year operating earnings by 10% from the €50m generated in 2014.
In first quarter, Patrizia collected €300m equity for the Patrizia Gewerbeimmobilien Deutschland II fund with target volume of €600m, and also set up the Patrizia Nordic Cities fund for two investors, which will hold 10 commercial assets in Denmark as seed assets.
The company has come a long way from the dark days of the credit crisis, when it struggle to refinance the long term lending on its much simpler business model, of being essentially a regional opportunistic trader of residential housing, mainly in its Bavarian heartland.
“Patrizia today is in the position to seek out attractive investment opportunities in the individual European real estate markets for its investors,” said CEO Wolfgang Egger in a release. “That applies to the various types of use across all stages of the value chain in all phases of the real estate life cycle.”
In an interim release Patrizia said it has raised total assets under management by €900m to €15.5bn and started with a solid first quarter, even though operating earnings fell to €7.5m from €16m in 1Q14 - which included the €1bn Leo I portfolio of mainly government and municipal buildings acquired from the State of Hesse. “We are continuing to view the future with the utmost confidence - and not just for the current year,” said Egger. “Even without the tailwind of low interest rates, real estate con- tinues to be an essential component of institutional investors’ portfolios.” He confirmed the full-year forecast of raising earnings by 10%.
Through its diversification strategy, 28% of Patrizia’s managed real estate is now located outside Germany. The firm’s recently-established subsidiary in Madrid to explore opportunities mainly in residential in Iberia, followed local offices set up in the last two years in Scandinavia, France, UK and the Netherlands. It also co-invested in Ireland for the first time, and was further in the news last week when it partnered as asset manager with Taiwanese insurance company Fubon Life to buy the popular tourist attraction Madame Tussauds for £332.5m sterling.