Warburg-HIH moves into value-add space
Warburg-HIH Invest Real Estate is setting up a new business unit with a view to investing €300m in German value-add offices/offices with rental upside by the end of the year, marking a change of direction for the group, which has traditionally focused on core and core plus assets.
‘In a dedicated effort, we will upgrade the properties, eliminate vacancies, bring them up to the market level within three-to-five years and dispose of them afterwards,’ said Hans-Joachim Lehmann, managing director of Warburg-HIH Invest. ‘We will limit these activities to the ‘Big 7’ cities, which are subject to keen demand among investors and tenant leads.’
The unit will be headed up by Daniel Werner, who was previously at HOCHTIEF Projektentwicklung where he most recently served as head of branch in Hamburg and had the overall responsibility for the operating activities there. Werner brings more than 20 years of experience to the job and has been active in the property development sector for the past 14 years.
‘Insurance companies, pension funds and superannuation schemes increasingly demand investment opportunities that will help them offset the current yield compression in the prime property segment,’ said Alexander Eggert, managing director at Warburg-HIH Invest.
Earlier this month, Warburg-HIH Invest closed the biggest deal in the company’s history when it completed the sale of five offices acquired for its Warburg-HIH Deutschland TOP 5 Fonds to real estate funds managed by French asset management group Amundi Immobilier, as agreed in December 2018. While the purchase price hasn’t been disclosed, market insiders estimate that the portfolio is likely to have sold for around €570m.
The offices are located on Potsdamer Platz in Berlin, Oper 46 and Schillerstraße in Frankfurt, and Brooktorkai and Valentinshof in Hamburg, with a combined gross lettble area of around 70,000 sqm. Four of the five properties are multi-tenant assets. Tenants include co-working provider, The Office Group.
‘With this transaction, we are completing the largest portfolio sale in the company’s history,’ said Lehmann. ‘It is a German property portfolio of exceptional value and outstanding performance in a market that will continue to serve as a stabilizing anchor.’
Amundi Immobilier was supported by L’Etoile Properties for commercial aspects, by Clifford Chance in legal matters as well as Drees & Sommer on technical issues. The seller was advised by Ashurst. The transaction itself was brokered by JLL.