Tristan continues German buying spree, but warns of headwinds
Independent London-based real estate investment boutique Tristan Capital Partners recently closed five German commercial property acquisitions for more than €300m, it announced at the recent MIPIM in Cannes. At the same time it warned that, while there were still interesting opportunities in Germany, a cautious eye and strict discipline were now the byword.
The five new deals carried out by Tristan-managed funds Episo 4 and CCP 5 include the acquisition of the Access Office Center in Frankfurt for €81m; a multi-purpose office building (Speyerer Strasse 4-6) in Heidelberg’s Bahnstadt for €64m; a portfolio of seven offices across Dusseldorf, Essen, Mulheim an der Ruhr and Neuss; Hery Park, a retail park with logistics in Bavaria for €53.5m; and Eurocenter I and II, a hotel/office scheme in Dusseldorf for a total development cost of €70m.
According to Ali Otmar, partner and deputy head of investments, ‘Germany continues to be strategically important for us and has typically represented around a quarter of the deals we have done across both opportunistic and core plus fund series. The transactions we have completed over the last twelve months show that there are still interesting opportunities, but with a 17-year track record of investing in Germany, we know that this is the point in the cycle where watching supply at a local market level and maintaining our discipline is critical.’
He added, in reference to the German business climate, ‘We are cautiously optimistic about the outlook for Germany and we are still seeing interesting opportunities despite the macro-economic headwinds. Germany is further into the “growth phase” of its cycle than the rest of Europe, but just as countries within Europe are moving at different speeds, so too are German cities.
‘As with other European markets, yield compression has been the dominant value driver in Germany, but if you look at the occupier market, all major cities have been experiencing rental growth ranging from 1.5% p.a. in Frankfurt to 8.5% p.a. in Berlin.’
Tristan’s latest acquisitions bring to €1.2bn the combined value of its 11 transactions in Germany over the past year, including €550m for acquisitions. These included buying the Deutsche Telekom complex in Cologne, the Werfthaus in Frankfurt, and Parseval Square in Düsseldorf. Disposals included the Garden Tower in Frankfurt, the Schutzenquartier in Berlin, a logistics portfolio across Germany and Rathaus Mitte Berlin for a total of €635m.
Overall to date, Tristan-advised funds have completed €4bn of acquisitions in Germany.
Meanwhile, just this week, the core-plus fund Curzon Capital Partners 5LL which is advised by Tristan, joined with Barings on behalf of an institutional investor to buy a portfolio of temperature-controlled food logistics properties in Germany and Denmark from food logistics specialists Nagel Group, in a sale-and-leaseback deal.
CCP 5 LL will acquire 27 assets, comprising 180,000 sqm of space, of which 83% of the total lettable area is located in Germany, while Barings will acquire seven assets in Germany totalling 80,000 sqm. Barings will provide asset management services for the entire portfolio of 34 assets.
Tristan’s Ali Otmar said: “Nagel-Group is the undisputed market leader for temperature-controlled food logistics in Germany and also a leading player in Europe. The assets in this portfolio are all situated in well-established logistics locations, in high density populated areas and/or in close vicinity to food and beverage producer.“
Barings’ Germany head Christoph Wittkop added, “The seven assets we are acquiring from this portfolio fit our core investment strategy, providing long-term income secured by a strong covenant. Having sourced the portfolio, we are now looking forward to managing the portfolio on behalf of Barings and Tristan so that we can optimise values.”
Nagel-Group has operations at 130 sites in 16 European countries, and makes more than 100,000 shipments a day in five different temperature ranges to its customers, who include hotels, catering and food service businesses, food manufacturers and supermarkets.