Orion clinches €600m Odin portfolio deal from Credit Suisse
Two open-ended funds from Credit Suisse have sold the much speculated-upon Odin office portfolio to London-based private equity firm Orion Capital Partners, for a sum thought to be just north of €600m. The portfolio consists of 19 separate assets, mainly located in Berlin and Hamburg, and will be allocated to Orion’s European Real Estate Fund IV.
Frankfurt-based property lender Helaba said it was providing €347m in financing for 11 of the properties, spread over six German cities with a concentration in Hamburg and Berlin, with 178,000 sqm of which 81% is currently let. The top 10 tenants with strong covenants - such as the Federal Institute for Real Estate Issues, Philips, or Reemtsma - account for 72% of the rental income and 57% of the lettable area. Dutch electronic concern Philips’ German headquarters in Hamburg is among the assets is included in the sale. The terms were thought to be for five-years, at a margin of less than 200 bps above Euribor.
16 of the properties are being sold from Credit Suisse’s CS Euroreal public mutual fund, while the remaining three are from the institutional open-ended fund CS Property Dynamic. Both the funds are in the process of being wound up with liquidation deadlines of April 2017 and December 2016 respectively. The portfolio was put on the market through Brookfield Financial last summer.
According to Aref Lahham, one of the three founding partners of Orion (along with Van Stults and Bruce Bossom), “Orion assessed the quality of the portfolio to be superior compared to other German office portfolios that are currently being marketed. Many of the assets are located in the big seven cities and the portfolio is anchored by strong credit tenants. Orion’s business plan is to drive rental income by investing in the premises in order to increase occupancy levels and further institutionalise the assets.”
Credit Suisse will continue to manage the assets after the sale to Orion. The fund manager has been selling off assets since closing down the fund in 2011, but CS Euroreal, which had previously been one of the biggest open-ended funds with €5.1bn under management, still had 67 properties in 38 locations across 11 European countries at the end of April. In December 2014 CS Euroreal sold a package of six assets in Sweden, France, Germany and the UK for €315m, or about 6.5% below their last assessed value, and this deal looks to have been sold at a similar discount to the book value of just under €700m..
The deal underlines a strong return to the German market for Orion, which has been absent from the market for several years. In December the group came back to Germany by buying the Lilien-Carré shopping centre in Wiesbaden out of insolvency (reported on in these pages). Orion has over €3bn of European office properties under management.