Deal
The acquired assets, consisting of 80,000 sqm of lettable area, were built in the years 1999 –2014 over 130,000 sqm of land, and are fully let, mainly to the Volkswagen group (about 60% of the lettable space through 15 different leases), as well as to other leading companies in the automotive industry.
Summit Germany Ltd, the AIM-listed German commercial property investment company, said last week it is buying a portfolio of commercial properties valued at about €100m from Dazzle Capital Holdings Ltd.
The properties are located at four different sites in the Volkswagen city of Wolfsburg, and generate an aggregate annual net rent of €7.9m, reflecting a net rental yield of 7.9%. The portfolio has liabilities of €70m, and Summit Germany is paying the equity portion of €30m from its existing cash resources.
The acquired assets, consisting of 80,000 sqm of lettable area, were built in the years 1999 –2014 over 130,000 sqm of land, and are fully let, mainly to the Volkswagen group (about 60% of the lettable space through 15 different leases), as well as to other leading companies in the automotive industry.
Wolfsburg has a population of 120,000, and houses Volkswagen's headquarters and the world's biggest car plant. It was recently ranked as the German city with highest GDP per capita (despite Volkswagen's woes as a result of the emissions scandal, which is costing the company billions of euros and dollars in fines).
This acquisition will increase Summit Germany's gross asset value from €800 million to €900 million and the net rent from €58 million to €66 million.
The company's mainly office, retail and logistics properties in Germany are managed by DRESTATE Services GmbH from offices in Berlin and Frankfurt. Preferred assets are those close to financial centres, with low capital value and stable incomes.
In a statement last year on the group's German expansion plans, chairman Harry Hyman and managing director and controlling shareholder Zohar Levy said, "We are encouraged by the German market, which has been strongly driven by the 'interest free' environment, turning Germany into an ever-appealing investment market. Demand for the group's properties continue to be strong and we believe that an increase in rent levels in Germany could have a future boost effect on the value of our portfolio when yields may be tightening."
"Though the increasing demand for German real estate offers interesting acquisition opportunities, the expected future yield compression will force us to maintain a disciplined approach towards new acquisitions in an ever demanding market."
