Deutsche Bank buys remaining Corpus Sireo residential

Deutsche Bank subsidiary Deutsche Asset & Wealth Management (formerly RREEF) showed that it still sees upside value in the German residential real estate sector when it bought the Merkur residential portfolio from asset manager Corpus Sireo. The portfolio represents the last remaining residential holdings owned by Corpus Sireo. It will now join DAWM’s institutional funds division.

The portfolio, held by Corpus Sireo Investment Residential GmbH, consists of 3,604 residential units and 154 commercial units totalling 260,000 sqm. Following the sale, Corpus Sireo will continue to exclusively asset-manage the 123-building residential portfolio for the next ten years, initially.

The sale price was not disclosed, but we reported recently here in REFIRE that we thought the division was valued at about €300m, and generated annual rental income of more than €20m. This sales price would be based on housing portfolios of equivalent quality normally expecting to fetch a multiple of 15-16 times annual rent, while the market for such portfolios has still been holding up firmly in Germany recently.

Most of the apartments are situated in Berlin, with additional locations in Nuremberg, Braunschweig, Hanover, and Leipzig. The vacancy rate is around 3.2%. The properties dating from 1857 to 2005 were acquired by Corpus successively through 2008, since when the group has largely been operating as a pure real estate service provider and reducing its own owned physical assets.

Corpus Sireo’s now-prime business is the property servicing business, known as Project Venus, and this segment of the business is up for sale, with a decision on the new owner likely by the end of July.

Corpus Sireo, which is owned by shareholders the Sparkassen (savings banks) of Cologne-Bonn, Düsseldorf and Frankfurt, handles real estate interests in Germany for clients including Deutsche Telekom, Deutsche Bank, and private equity groups Cerberus and Brookfield, and partners new institutional investors coming into Germany through either its Luxembourg investment management platform or through its international client management team in Frankfurt. It maintains 10 offices throughout Germany, with 560 staff.

Among those thought to be interested in bidding for the company are property advisory groups JLL, CBRE and asset manager CR Investment Management, given the industry-wide trend for brokers and advisory groups to vertically integrate along the whole chain of value-added services.