Tristan cleans up German portfolios with landmark property sales

London-based investment management boutique Tristan Capital Partners has been cleaning up several of its German portfolios, and in the last couple of months has made some significant disposals after improving and repositioning sevaeral prominent assets.

This month Curzon Capital Partners III (CCP III), a core-plus fund advised by Tristan along with long-term partner caleus capital investors, sold the landmark Rathaus Mitte (City Hall) office building to German fund manager Union Investment, who bought the asset for its open-ended real estate fund UniInstitutional European Real Estate for €87.4m.

Built in 1998 on the site of the former Hotel Berolina, the 13-storey, 50m high Rathaus Mitte building comprises circa. 20,000 sqm and is 100% long-term let to the Municipality of Berlin. The asset is strategically located in the heart of Berlin’s city centre district, about 500m to Alexanderplatz, with the Schillingstraße subway station situated directly in front of the building.

Alejandro Obermeyer, Head of Investment Management DACH at Union Investment, said: “For a conservative, long-term oriented investment manager like Union Investment, the Rathaus Mitte is an exceptionally good investment opportunity. Berlin Mitte continues to develop very positively overall and with an office vacancy rate of two percent it is at a historical low level. The Municipality of Berlin is a very reliable tenant and the Rathaus Mitte fits perfectly into our portfolio."

A month earlier, Tristan's European Property Special Opportunities 3 fund (EPISO 3), again with caleus capital investors, sold off the historic building Schicklerhaus just north of the river Spree in the Mitte district close to Jannowitzbrücke, to SIGNA Development Selection.

The Schicklerhaus was the final asset within a 14-property portfolio of office and retail assets located across Germany to be sold by the Fund, following a three-year programme of investment and active asset management. Following the disposition of all assets, the Fund achieved an aggregate exit price of more than €210m.

EPISO 3 purchased the portfolio from three funds managed by DG ANLAGE (a subsidiary of DZ Bank Group) in December 2014. The Fund successfully repositioned and disposed of four assets in 2015, a further seven in 2016 and the remaining three in 2017. The majority of the assets in the portfolio are located in Berlin, Leipzig or Frankfurt.

Jean-Philippe Blangy, managing director and head of asset management at Tristan, said, "We achieved our objectives of improving the quality of the assets and ensuring their suitability to buyers. We worked hard at a granular level at each asset to correct the impairments and tailor the asset to the right buyer at the right time, which enabled us to achieve exceptional returns for our Fund and its investors.”

It's not all been about disposals, though. At the beginning of December, Curzon's CCP 5 ‘long-life’ core-plus fund, advised by Tristan, made its first investment in Germany by buying an office complex in the Bonn occupied by Deutsche Telekom for around €35 million in an off-market deal. The seller was a fund managed by Art Invest Real Estate.

According to Tristan senior partner Ali Otmar, “The fund was able to acquire the office complex on attractive terms without having to go through the structured auction processes that typically drive sales of this kind of an asset in Germany, due to Tristan’s extensive network of local contacts on the ground. The knowledge and experience of our German joint venture operating partner, Silver Cloud Invest, also played an important role in the transaction and they will be making a co-investment in the deal alongside CCP 5.”

Deutsche Telekom entirely occupies the 18,658 sqm office complex in the Bundesviertel area of Bonn. The city has a buoyant office market with a vacancy rate of just 2.7% and a limited pipeline of new supply.