Blackstone starts disposing of OfficeFirst assets, sale to Alstria

Private equity giant Blackstone earlier this month completed its €3.3bn acquisition of the OfficeFirst platform in Germany from IVG Immobilien and wasted little time in appointing a new management board. It has also started the disposal of what it sees as non-core assets in the portfolio, with the sale this week of a portfolio of twelve office properties with 106,000 sqm, mainly in Hamburg and Düsseldorf, to Alstria Office REIT AG.

With the takeover of OfficeFirst complete, three directors - Michiel Jaski (CEO), Oliver Priggemeyer (COO) and Fabian John (CFO), are vacating their seats and will be replaced by former IVG board members Guido Piñol and Jonas Kriebel, with Piñol as CEO.

The two new directors left IVG in 2014 and co-founded a Frankfurt-based firm, Quincap Investment, so the OfficeFirst assets will be familiar to them. The OfficeFirst portfolio includes about 100 properties with around 1.5 million sqm, more than 90% of which are located in the CBD's of Germany's biggest cities

Commenting on the closing of the deal on 31 March, Anthony Myers, Blackstone's head of Real Estate Europe, said: "Blackstone will work with OfficeFirst to support the company's continued growth and focus on value maximising strategies across the portfolio. We will continue to deploy capital in Germany's most dynamic gateway cities across the commercial and residential real estate sectors, making use of the breadth of skills and expertise at OfficeFirst."

Talking recently to German business daily Handelsblatt, new CEO Piñol commented on the make-up of the portfolio and Blackstone's plans for its new platform. "OfficeFirst will be the sole office property management platform for Blackstone in Germany, and will direct its focus to maximising the value of the portfolio…About half of the portfolio has little strategic character for us, and we expect to be parting company with a lot of the smaller assets."

Obviously the company has wasted little time in getting on with this. On the sale this week to Alstria Office REIT of the twelve smaller assets, Piñol said, “Our strategy is to take advantage of the currently favourable investment market conditions while focusing our efforts on maximising the value of our key, value-driving portfolio properties located in Germany’s main gateway cities. The sale of this portfolio of smaller properties to Alstria meets both these objectives. It is a significant first step in our plan to streamline OfficeFirst’s asset management activities.”

Blackstone's real estate business was founded in 1991 and it has around $102 bn (€96bn) in investor capital under management. The real estate portfolio includes office, retail, industrial, hotel, and residential properties in the US, Europe, Asia and Latin America.

Its German portfolio includes the Messeturm and Pollux skyscrapers in Frankfurt, Treptowers in Berlin, the Sumatrakontor in Hamburg, as well as the Loopsite office complex in Munich.