Curzon Capital Partners 5 (CCP 5), a core-plus fund advised by Tristan Capital Partners, confirmed on Wednesday that it has acquired all units in the AEW City Office Germany fund from German institutional investors advised by AEW, as tipped by PropertyEU in August.
The vehicle owns a portfolio of seven office buildings in Germany, providing a total of 83,064 m2 across six prime office locations. The package – known as the Selection portfolio – was valued at around €480 mln in Q1 2020 and was put up for sale by AEW through Colliers earlier this year. It also includes two separate facilities in Cologne and individual sites in Berlin, Frankfurt, Munich, Hamburg and Dusseldorf.
The portfolio benefits from a diversified mix of strong covenant tenants and has very low vacancy rates across all sites (2%), generating €16 mln in annual rents.
Commenting on the sale, Marc Langenbach, head of Funds & Separate Accounts Germany, from AEW said: ‘Our strategy was to carefully assemble a set of well-located offices in six of Germany’s major cities, where we could add value through active asset management, including repositioning and leasing to drive the capital value and income quality of the properties. We think it is the right time to crystallise the value for our investors who signed up for the Fund in the first subscription phase.’
AEW has been able to secure capital commitments for the next fund in the series, the AEW City Office Germany II, for which it is actively building a pipeline of potential investments, added Langenbach.
Constantin Plenge, managing director at Tristan Capital Partners, said that the company is looking confidently at the German office market. ‘Germany looks set to be one of the markets that recovers fastest from the coronavirus crisis, as the underlying fundamentals across the top six markets remain strong and unemployment is currently at around 4%,’ he said.
‘We believe that we will see sustained demand for high-quality office space in prime locations in Germany over the next few years and that the ongoing demand and supply imbalance will outweigh any short-term, incremental rise in vacancy in the immediate wake of the current crisis. Furthermore, given the location and physical quality of each of the individual properties, we expect that they would be first to re-emerge following any market volatility.’
The operating partner for the acquisition of the portfolio will be Barings Real Estate.
CCP 5 was advised by Barings, Clifford Chance, PwC, Witte, DeBI, CBRE and BNP. The vendor was advised by King & Spalding, Yester & Morrow, Colliers, JLL and Westbridge.