Berlin: With many conditions, Orco takes over GSG
Sale of Berlin's Gewerbesiedlungsgesellschaft (GSG) is consummated. The city's Senate agreed to sell the firm for €308.7mn to a consortium consisting of the Orco Group and the Morgan Stanley Real Estate Fund. Furthermore, the investors took over outstanding debts of around €90mn. GSG possesses 42 commercial mixed-use units with a total of 750,000 m² of office and commercial area. The sales decision must now still be certified by the federal state of Berlin's City Parliament. Parliamentary approval, however, can be counted on, as both government factions have spoken out in favor of the transaction.
Conversion into lofts only after transition period
The new owners assume numerous obligations in the purchase agreement:
Orco warrants that it will settle its headquarters in Berlin for 20 years.
After a two-year transition period, vacant properties are allowed to be converted into lofts.
Existing tenants should receive new rental agreements whose conditions are the same or, in comparison to the market, less expensive than current conditions.
Orco and Morgan Stanley will provide €10mn for the aid of start-up and small firms.
Drop in vacancy as main goal
Above all, the new owners want to achieve an increase in yield through vacancy abatement. Currently, around 30% of the areas are empty, in one of the commercial mixed-use units, vacancy amounts to 60%.