News from 06/21/2007
Terra Firma: High price expected for Tank & Rast
With the sale of Tank & Rast AG, Bonn, Terra Firma is expected to achieve a high profit: According to press reports, offers of up to €2.5bn have been received for the takeover of the highway service area chain for which the British financial investor paid €1.1bn three years ago. Among the bidders were the Australian Macquarie and other infrastructure funds, as well as the firm Heiner Kamps' international Food Retail Capital, according to industry rumors. A decision is expected within the next few days.
Berlin: Irish investor buys residential and business building downtown
An Irish investor has bought a residential and business building on the Alte Schönhauser Straße for twenty times net annual rent. Silence was agreed to over the purchase price. The deal was mediated by DB Immobilien.
Real I.S.: New umbrella property fund invests in Australia
Real I.S. has started the umbrella property fund Pacific Growth. The fund is oriented towards institutional investors. The firm expects an internal rate of return, after taxes and miscellaneous fees, of between 8.5% and 10.0% p.a. Target volume amounts to AU$100mn, maturity is ten years after the end of placement. The target funds of the new umbrella fund will be managed by the Australian partner Charter Hall Group. The investments will be spread among core plus and value-added properties, as well as over the office, retail, and industry property sectors. The properties are located in the Australian cities of Sydney, Melbourne, Perth, and Brisbane, as well as a small portion in neighboring New Zealand. According to information from Real I.S., Sydney and Melbourne in particular will be expecting increasing rents and property prices in the coming years.
Foreign optimism in the German property market, particularly from the UK and the US, has lately been superseded by disappointment. From the perspective of German experts, finance investors from abroad have miscalculated costs.
REITs: Short-term amendment of the G-REIT law expected
The REITs euphoria in Germany has cooled down appreciably. Wolfgang Schäfers, professor at the International Real Estate Business School (IREBS), says he is generally optimistic about the potential of REITs. However, he doubts that market capitalization will reach high double-digit billions in the short- to medium-term future, as projected by experts. “What we are seeing is that most firms won't be in the position to bring their properties to the stock exchange,� explained Schäfers at the convention Business & Talk by Aengevelt in Wiesbaden. For January 1, 2008, experts don't expect a REIT glut, especially since most firms in Germany would have hardly any IPO experience with REITs. He thinks rising sales on the part of firms with large property portfolios are more likely. In the first instance, Schäfers expects REIT issues with private equity firms which have established a large portfolio volume here in the last years. “With the phasing out of the Exit Tax, we will notice 2009 that the G-REIT was a miscarriage,� says Schäfers, assuming a necessary short-term amendment of REIT law.
Munich/Bavaria: Residential prices increase around 4%
After the economic low of 2005-2006, property prices increased again in Munich last year. At 4.9%, IVD South recorded the highest price increases of single-family houses; prices for apartment buidling plots increased 3.7%. Additional price increases were recorded for both detached single-family houses (5.1%) and also semi-detached houses (4.2%) and mid-terrace houses (5.6%). Three-bedroom condominiums are also on the upswing: Prices for new properties increased 2.3%, buildings from existing inventory 3.4%.
Cologne: MEAG starts office building project “Cologne Oval Offices�
Munich Ergo Asset Management (MEAG) is starting a new construction project, Cologne Oval Offices (COO), on Gustav-Heinemann-Ufer. An ensemble two building parts with approximately 29,600 m² of office area and a shared underground garage (242 parking places) is planned. According to MEAG, the investment sum amounts to €80mn. Completion is targeted for the middle of 2009.