PGIM Real Estate has partnered with Irish group Signature Capital to buy a portfolio of four office properties in Berlin's central Mitte and Kreuzberg districts, which includes redevelopment permission.
The share deal, thought to be for just under €300m, is the latest in a series of investments that Signature Capital and PGIM Real Estate’s European value-add debt strategy have jointly made over recent years.
The Mitte based properties, known as the Arrow Portfolio, consist of 32,000 sqm of former senior living residencies, which will be converted into top-grade office space. There is also a further fully-permitted development of 8,500 sqm. Two of the properties are 94% and 69% leased, while two other are vacant and offer refurbishment and re-tenanting potential.
The sellers are Patrizia AG and PGGM Private Real Estate, who started assembling the portfolio in 2017 by buying the assets in individual and predominantly off-market transactions.
German lenders Pbb Deutsche Pfandbriefbank and Commerzbank are providing €200m of financing to Signature Capital for the deal, which includes a facility to refurbish the four buildings and the extra development. Both banks acted as co-arrangers and put up equal amounts, with Pbb acting as facility and security agent. Both have also a track record of lending to Signature Andrew Macland, head of European debt at PGIM Real Estate, said: "The investment provided by our European value-add debt strategy for this successful acquisition demonstrates our commitment to capitalise on the strong economics and employment growth in Berlin and other German office markets on behalf of our investors."Enda Woods, co-founder of Signature Capital, said: “The properties are an ideal addition to our existing portfolio and offer an attractive value-add opportunity. The continuing tenant demand and shortage of space in the Berlin office space market re-enforces our current acquisitions strategy.”And on the sellers’ side, Paul Hampton, Patrizia’s head of International Fund Management, referred in a statement to Patrizia’s 20-year long relationship with PGGM: “It has been a huge success – something that has been made possible by our in-house teams, notably research, deal origination and asset management working so collaboratively together This result validates our contention that despite the competitive market place, value can be found, and in some of Europe’s most exciting and dynamic cities.”
