French companies L'Etoile and FdR increase German footprint

Two big French companies announced expansions in their German investments at the recent MIPIM in Cannes. Investment manager L'Etoile said it had more than doubled its German real estate portfolio in 2015, while REIT/SIIC Foncière des Régions has just invested a further €241m in the market, mainly into Berlin residential.

International property service provider L'Etoile Properties had a property portfolio in Germany with 190,000 sqm valued at about €400m at the end of 2014. By the end of 2015 this had jumped to 423,000 sqm with a value of more than €1.1bn. This year alone it has bought for a further €260m.

The company has had an office in Hamburg looking after its German interests since 2011. It describes itself as a 'one-stop shop', accompanying international investors as a long-term partner throughout a property’s investment cycle. A typical deal was one we reported on in these pages recently, when it bought a 31,800 sqm Frankfurt office property for French fund manager Amundi Immobilier and Finnish pension fund group Ilmarinen. The property is fully leased to Commerzbank, who just signed a new long-term lease on the building in July 2015.

Meanwhile SIIC Foncière des Régions (FdR) has become a major player in Germany, having built up a German residential portfolio of €3.6bn. Its latest investment involved its 61% owned German residential unit Immeo paying €165m for 945 renovated housing units in various Berlin locations including Mitte, Prenzlauer Berg and Friedrichshain. It also paid €76.4m for a complex in the Mitte district, containing 117 housing units, 10,700 sqm of office and retail space and a 238-room Novotel Hotel.

FdR said the immediate average yield of the acquisitions comes to 4.9% (4.6% for the residential part) for prime locations, which conceal an average rental reversion potential of 40% (of which 50% for the housing units).

Active in the German market since 2005, the company's German Residential business division is its second biggest (at 20%) after France Offices. Last year FdR bought new assets for €871m (group share €529m), mainly in Hamburg and Berlin. Berlin now accounts for 44% of the German portfolio, up from 28% at the end of 2014. The investments included buying Copenhagen-listed Berlin IV A/S, which owns and manages 135 buildings with 2,735 apartments in Berlin

Rental income on the portfolio increased by 2.4% on a like-for-like basis, and 4.4% was in Berlin, with the occupancy rate stable at 98.0%. Valuations rose by 5%, and by a full 12.2% in Berlin.