German fund giant Union Investment obviously believes in the strategy that “the best form of defence is attack”, as it concluded a number of mega-investments over the past month, both in the office and the logistics sectors.
In one of the largest deals in the office sector this year, Union bought the ‘Medicus’ portfolio with six mixed-use properties in Düsseldorf and Berlin from a joint venture of several pension schemes and project developer Hines. Union will allocate the portfolio to one of its recently-launched speciality funds, which invests in the prime core segment, focused on prime German city locations.
The total lettable area of the six assets is 46,000 sqm, mainly offices with some hotel components. Three are project development, with the other three being portfolio properties. In Berlin, the portfolio includes the office building that is part of the highly visible “Südkreuz Berlin” project, excluding the residential units on the same site.
Wolfgang Kessler, managing director at Union Investment for institutional property, said: "The Medicus portfolio has an outstanding property quality in predominantly top core locations with an attractive mix of new and existing properties, different lease terms with stable cash flow and rental potentials, as well as a stable value going forward.“
And, in probably the largest single transaction in the German office property market this year, the Hamburg-based Union bought the “Neue Balan Haus 27” office project development in Munich in a forward purchase, which it will allocate to its open-ended real estate fund UniImmo: Deutschland.
The seller is local investor Allgemeine SÜDBODEN Grundbesitz AG, and the price, from what REFIRE can glean from trade circles, was €320m. (If correct, this would put the purchase price at a multiple of 34 times annual rent, which is decidedly adventurous – REFIRE).
The ‘office cluster’ development, described by Union Investment’s Alejandro Obermeyer as “a compelling work-life balance concept offering a high degree of flexibility”, was previously the headquarters of listed group Infineon. It has now been converted into a diverse campus of 8.5 hectares, and includes a 50-metre swimming pool along with 170,000 sqm of office (32,000 sqm over nine floors), gastronomy, retail and fitness, a university and a Montessori school. The project will be completed at end-Q1 of 2021.
The Neue Balan project is 60% let, with the seller providing a rental guarantee for the remaining unlet space. Companies who have committed already include software group Autodesk and healthcare portal Jameda.
The Munich deal is Union Investment’s third major investment in Germany this year following the purchase of the Ericus-Contor building in Hamburg and the Medicus portfolio (above). Union’s office portfolio in the Bavarian capital now amounts to more than €2bn.
Separately, in a big logistics deal, Union Investment bought the ‘Rocket’ portfolio from Garbe Industrial Real Estate on behalf of two new logistics Spezialfonds launched jointly by Union Investment and Garbe.
The package consists of six development projects, due for completion in 2021, and two existing buildings. The portfolio, with 218,144 sqm of space, is distributed throughout Germany and split across six federal states. The properties are fully let to Amazon on leases ranging from 8.5 to 20 years. They are located in Achim, Rendsburg, Cloppenburg, Emden, Meßkirch, Kaiserslautern, Echzell and Frankenberg.
According to Stephan Riecher, head of investment management logistics and light industrial at Union Investment, ‘The acquisition of the Rocket portfolio marks another major step towards increasing the proportion of logistics properties in our holding.’
The deal brings Union Investment logistics portfolio up to 61 properties with a total value of around €2.7 bn. The company plans to double this to over €5 bn in the medium term. ‘We have 12 European national markets in our sights for future acquisitions. In addition to Germany, they include the Netherlands, France and Poland,’ said Riechers.
Earlier this year Union had bought the Logistrial portfolio from Garbe for
€800m (see REFIRE Nr. 189 from March 3rd, 2020) in a big move to increase and diversify across European logistics markets. At the time, Union Investment’s CIO and board member Martin Brühl had said that the fund manager planned to double its €1.2bn logistics portfolio and diversify it internationally.
