Gateway buys Värde commercial portfolio, revalues holdings

The listed, Frankfurt-based Gateway Real Estate inked a deal earlier this month to buy a portfolio of 21 commercial properties with about 100,000 sqm of lettable space from US alternative investment firm Värde Partners. The deal will boost Gateway's corporate real estate portfolio by 60% in size, to 31 assets and a total of more than 250,000 sqm.

Price details were not disclosed, although the expected annual rental income from the newly-acquired properties is €9.5mn, said Gateway.

The properties, described as 'in good condition', are distributed throughout Germany, primarily in North Rhine-Westphalia and Lower Saxony. Half of the properties are offices, along with restaurants and hotels (28%), retail properties (10%), and medical practices and warehouses (5% each). The vacancy rate for all properties is 14.3%, with the average remaining term for leases just under five years.

Gateway describes its strategy as essentially 'buy and hold', although on this latest deal, it said that, along with extending short-term leases and filling vacancies, Gateway would be looking to sell individual properties.

Gateway posted a profit of €16.7m in 2017, up from €6.3m in 2016. EBIT was €30.1m, up €233m on the previous year, largely due to revaluations.

The Minneapolis, Minnesota-headquartered Värde Partners has more than US$13bn of alternative assets under management across an array of geographies, segments and asset types, including specialty finance, real estate, corporate credit, mortgages, energy and transportation.

Värde seems to have been cleaning up and streamlining its German holdings over the past few years. In January this year it sold six retail parks as part of its Saturn-Portfolio along with CR Investment Management to retailer REWE.

Last October it joined up with German family-owned real estate investor Accom GmbH to take over the German portfolio of Stuttgart-based balandis real estate ag, in a move designed to broaden Värde's footprint significantly in the German commercial real estate market.

The balandis portfolio is the rump portfolio of what was the Dreiländerfonds (DLF) of Walter Fink, and consists of 37 commercial properties with 187,000 sqm of lettable space, mainly located in secondary German cities – many in smaller towns around Stuttgart, Rosenheim, Mainz, Frankfurt, Hamburg and Dresden. The properties are diversified in size and asset categories and include hotels, retail, office and mixed-use.

Balandis and its 50-man team were absorbed by Accom, which subsequently added the Stuttgart HQ to its own existing offices in Hannover and Munich. The enlarged 100-man Accom now handles the asset management for the new entity and should lay the groundwork for further expansion. BerlinHyp and HSH Nordbank provided the primary financing for the deal, with HypoVereinsbank also providing further financing.