Benson Elliott commits €300m to Berlin site from CA Immo
UK private equity group Benson Elliot has acquired a 2.5 hectare mixed-use site in central Berlin, fronting the Spandauer Schifffahrtskanal, from listed Austrian property company CA Immo. The off-market acquisition in Europacity – Berlin's largest urban renewal project – allows for the development of 70,000 sqm of residential, retail, restaurant and office space. Benson Elliot plans a €300m development on the site.
The deal consisted of eight separate plots, which CA Immo had earmarked for divestment as part of its ongoing disposal programme. The company has been actively selling assets over the past few months, including plot sales in Berlin, Regensburg and Düsseldorf, a mixed-use building at Mainz Zollhafen for €66m to Aberdeen Asset Management and a 50% share in Poleczki Business Park in Warsaw to its Vienna-based joint venture partner UBM for over €80m.
The Europacity project has transformed about 40 hectares to the north of Berlin's main railway station – an area which lay derelict for decades – into a new, mixed-use city quarter. The area lies a short walk from the Bundestag, various federal ministries, the Charité (Europe's biggest university hospital) and Humboldt University.
Europacity has become a magnet for large office users, hotels, retailers and cultural facilities (including the iconic Hamburger Bahnhof – Museum für Gegenwart). With over two hectares of Europacity devoted to parks, and a kilometre of waterfront along the Spandauer Schifffahrtskanal, Europacity has also seen the development of some of Berlin's most desirable housing.
CA Immo has already developed a number of projects in the quarter, including the Tour Total, John F. Kennedy House and the Intercity Hotel. “We plan on continuing this strategy with other initiatives including the development of the new KPMG building,” said CA Immo Director Guido Schütte. Despite its recent sell-offs to lower its heavy debt burden, the Austrian group still controlled assets valued at €3.6bn in Germany, Austria and eastern Europe at end-September last year.
Benson Elliot and its joint venture partner Kauri CAB Development intend to create a lively and attractive urban residential quarter, fully integrated into Europacity's working, living, cultural and recreational network. Current plans are for the construction of around 500 multi-family rental apartment units, on top of ground floor restaurants and cafes. The project will also incorporate 10,000 sqm of commercial and mixed-use space, together with a day-care centre. First occupancy is expected in early 2018.
Benson Elliot partner Philipp Braschel said: "The Europacity site provides Benson Elliot with a unique opportunity to create high-quality rental housing right in the heart of Berlin, whilst making a significant contribution to the city's sustainable development. Berlin is going from strength to strength; together with our acquisition last year of Berliner Volksbank's City-West headquarters, our Europacity purchase demonstrates our ongoing commitment to Berlin as an investment destination."
Earlier in January Benson Elliot took advantage of an unsolicited offer to sell an office building in Berlin's prime City West district, at Kurfürstenstrasse and Budapester Strasse. It had only bought the eight-storey building, along with an adjoining property, in March last year in a joint venture with Klingsöhr Projektentwicklung and Rockstone Real Estate. The two assets were acquired in a sale-and-leaseback transaction from Berliner Volksbank eG, with the aim of renovating both buildings and consolidating them into a single headquarters. The total value of the deal was estimated to be €100m.
Now Benson Elliot is selling the 6,200 sqm Kürfürstenstrasse property at a 4% rental yield to a fund backed by a German professional pension scheme advised by Cornerstone Real Estate Advisors. The Benson Elliot fund, BEREP IV, will reap an opportunistic 2.4 multiple on its investment.
Industry veteran Marc Mogull, Benson Elliot's managing partner, commented: "We stock-pick our investments for growth, but we need to be nimble enough to shift strategy when opportunity comes knocking. At the end of the day we're performance driven, not AUM driven. This disposal will enable us to make an early distribution to investors, and to recycle the profits into other opportunities."