Investors Closed a Raft of Large Deals in CEE and France in the Final Quarter of 2011 Ahead of an Expected Worsening in the Lending Climate Across Europe

deal analysis

investors widen search for prime

Investors closed a raft of large deals in CEE and France in the final quarter of 2011 ahead of an expected worsening in the lending climate across Europe

By CORMAC MAC RUAIRI

ross-border real estate investors moved beyond kets in the region which had been dormant, also began the safe havens of Germany and the UK dur- to see significant transaction activity. The CEE region Cing the fourth quarter of 2011 in their search is, however, strongly dependent on Western European for prime assets. Foreign investors ploughed more than banks for funding. Volume growth in the second half of €1 bn alone into Central and Eastern European markets the year declined as the eurozone crisis worsened. The in the three-month period, according to transaction data growing wave of uncertainty about bank lending will re- compiled by PropertyEU Research. Heitman was one strict CEE deal flow in 2012, Tromp warned. of the most prolific players. The US-based investment Reflecting a deepening north-south economic divide, manager’s €505 mln the ‘Big Three’ west- European fund, HEPP ern European mar- IV, carried out three Key trends in Q4 and FY 2011 kets continued to deals in the region in • Cross-border investors take more country dominate as the Con- the last weeks of De- tinent’s deal volumes cember. The largest risk in hunt for prime assets increased by between was a €170 mln joint • Foreign buyers inject €1 bn in CEE during 7.8% and 10%, reach- venture with devel- Q4; full-year deal volumes double ing full-year totals of oper Trigranit to buy between €115 bn and the Millennium office • Total European volumes for 2011 grow 4-8% €126 bn compared to portfolio in Budapest. to between €115-126 bn, brokers say 2010, brokers said. CBRE reported €8.7 • French volume climbs 65% q-on-q Cross-border inves- bn of transactions in tors booked a market CEE for the full year • Barcelona sees major office and retail deals share of 36% com- – double the total for pared to 33% the previ- 2010. ‘Despite the ous year, according to volatile market sentiment in recent years, CEE has man- Cushman & Wakefield. Their focus remained on prime aged to attract a significant amount of capital to be in- assets in Germany, the UK and France. Savills recorded vested in real estate,’ Jos Tromp, head of CEE Research a volume of €5.8 bn for Germany in the fourth quarter at CBRE, said in a report. The volume growth was driven and almost €23 bn for the full year. The full-year figure by opportunistic investment in Russia and a risk-averse represented a 20% increase on 2010. Retail generated an focus on Poland and the Czech Republic. But other mar- investment volume of over €11 bn during the year, mak-

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PEU12-MA01-031-DEALANALYSIS.indd 31 25-01-12 17:58 ing up almost half (49%) of total transactions in 2011 and TOP FIVE DEALS IN LARGE MARKETS Q4 representing an increase of 60% on 2010. Cross-border investors accounted for a third of German acquisitions. price € mln object, location buyer France, traditionally the ‘weaker’ of the three core markets, was the best improver in the fourth quarter. Its vol- FRance ume of €6.5 bn represented a whopping 65% increase 365 97 supermarkets La FranÇaise rem compared to the previous three months. The largest 292 paris office asset AEW Europe deal logged by PropertyEU Research involved real es- 290 3 PROPERTIES, pARIS NBIM/AXA RE tate manager La FranÇaise acquiring 97 supermarkets 277* strato/Rezo projects, Paris Tishman Speyer from retail group Carrefour for €365 mln in a sale-and- 260 2 offices near Paris Allianz RE leaseback transaction. La FranÇaise is majority-owned by Crédit Mutuel Nord Europe and manages €6 bn in poland real estate assets. The company has a voracious appetite, 131* new telecom HQ, Warsaw Qatar SWF having invested more than €600 mln of institutional 55 Molo mall, Szczecin Atrium capital via SCPI fund vehicles this year. The other four 49* OFFice property, warsaw Deka Immobilien top French deals in Q4 were office acquisitions in and 48* 80% Supersam, Katowice Resolution Prop. around Paris. Fund manager AEW Europe carried out 40* atrium bus. centre, warsaw rockspring the largest office deal for a fund that invests on behalf of French government fund Caisse des dépôts et consig- Other ceE markets nations. The next largest deal also included government 219 19 office assets, Prague cpI money. The joint venture between Norway’s giant petro- 170 Millennium assets, Budapest Heitman leum pension fund and AXA Real Estate expanded its 151 50% aUPARK MALL, bRATISLAVA Unibail-rODAMCO holdings by acquiring three assets for €290 mln. 136* alkotas point, Budapest Heitman 135 80% Czech logistic portfolio Tristan Central and Eastern Europe Sovereign wealth fund Qatar Investment Authority was SPAIN behind the largest transaction in Poland during Q4. It 400 tORRe Picasso, Madrid Pontegadea acquired the new headquarters being developed for tel- 189 sPLAU! MALL, bARCELONA uNIBAIL-RODAMCO ecoms firm Telekomunikacja Polska in Warsaw from 150 50% sPANISH PORTFOLIO dRAGO CAPITAL French developer Bouygues. ‘We choose only prime 70 4 RETAIL Assets, spain Värde Partners properties and great covenants,’ said Navid Chamdia, 68 palace Hotel, Barcelona UK investors head of real estate at QIA. ‘This investment proves that we believe in the Polish economy and its development GERMANY potential.’ Aside from the Heitman purchases, other major transactions in Central and Eastern Europe included 408 pep MALL, Munich TIAA-CREF Unibail-Rodamco, the largest listed property company in 400 silberturm, Frankfurt IVG consortium Europe, acquiring a 50% stake in the Aupark shopping 155* bethanien-Center Union Investment centre in the Slovakian capital Bratislava and Tristan 145* Westend Gate, Frankfurt RFR Holding Capital Partners concluding the second part of a logistics 140 RETAIL ASSETS, Leipzig/Dresden RREEF property acquisition in the Czech Republic. Amid persisting economic problems, Spain proved it UK could still attract major property investment. The top 466 Green Park, Reading Oxford Properties deal in Q4 was a local affair, with Pontegadea Inmobili- 421 1 Silk Street, London PNB (Malaysia) aria, the property firm owned by Spain’s richest man 375 UK Logistics Fund Segro/Moorfield Amancio Ortega, acquiring the Torre Picasso skyscraper 352 tRiangle portfolio Blackstone in Madrid. The next four involved foreign buyers, with a 340 tOWer 42, London Kirsh Group bias for Barcelona. Pension money was behind some of the largest deals in * estimate the UK and Germany. US pension asset manager TIAA- source: propertyeu research CREF won the tussle for the PEP mall in Munich, while Oxford Properties, which invests for Canadian pension giant OMERS, acquired the Green Park business park in Reading, with half the price financed by German banks.

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Top investors: what they bought in 2011 Below is a selection of major deals carried out by the top 15 investors in PropertyEU’s 2011 ranking

1. Blackstone 6. Union Investment 11. Rockspring total investment: €2.65 bn total investment: €1.30 bn total investment: €883 mln asset price €mln asset price €mln asset price €mln Mint Hotels, UK 687 Bethanien-Center mall, Germany 155* Olympia mall, Brno 250* Chiswick Park, London 570 Office property,M unich 93* 24% O’Parinor mall, Paris 106 Triangle logistics portfolio, UK 352 25% Limbecker Platz mall, Essen 78* Das Es! Mall, Germany 69 Teal logistics portfolio, UK 251 Zebra Tower, Warsaw 76 3 warehouses, Germany 62 office scheme,P aris 237* building at De Monarch, The Hague 70 12. Prupim 2. AEW Europe 7. Cerberus Capital total investment: €866 mln total investment: €1.91 bn Management asset price €mln asset price €mln total investment: €1 bn 3 Sainsbury’s supermarkets, UK 148 Confidential 292 asset price €mln Tesco superstore, Wales 75 Logistics portfolio, Czech Republic 280 45 Metro stores, Germany 1,000 Sainsbury’s store, London 57 Cap Ampère mall, Paris 193 Sapphire mall portfolio, UK 173 Le Balthazar office,P aris 168 8. Legal & General 13. Employees total investment: €948 mln Provident Fund asset price €mln total investment: €862 mln 3. Capital Shopping Fremlin Walk mall, UK 110 asset price €mln Centers 3 Malmaison hotels, UK 65 Tower Bridge House, London 196 total investment: €1.88 bn Meadows mall, UK 62 12 St James’s Square, London 180 asset price €mln 3 supermarkets, UK 54 Whitefriars office, London 176 Trafford Centre, Manchester 1,800 1 City Place office, Gatwick 47 Business park, Reading 162 Broadmarsh mall,Birmingham 86 Warehouse, UK 90 9. Tristan capital 4. Deka Immobilien total investment: €969 mln 14. Norges Bank im total investment: €1.86 bn asset price €mln total investment: €845 mln asset price €mln 6 logistics parks, Czech Republic 300 asset price €mln Vienne Rocher office,P aris 330 Sapphire retail portfolio, UK 173 50% of AXA Paris office portfolio 700 Schloss Arkaden mall, Brunswick 250 VGP II logistics, Czech Republic 120 Paris office deal (withA XA RE. 145 4 assets, Friedrich Carré, Berlin 105 Carré Bréguet project, Paris 110 City Cronan office,S tockholm 105* Office development,P aris 105 North Gate office, Warsaw 103 15. IVG Immobilien total investment: €800 mln 10. Allianz Real Estate asset price €mln 5. BNP Paribas Re total investment: €911 mln Via Agnello 18, Milan 45 total investment: €1.63 bn asset price €mln Building V, Amsterdam 29 asset price €mln 80% Skyline Plaza, Frankfurt 360 Holland House in Bonn 27* Cap Est, France 120 2 offices inP aris region 260 BTC OfficeC enter, Warsaw 25 15 stores in France 100 Office inP aris region 115 Mlodziejowski Palace in Warsaw 22 Copernic II, Paris 76 Berlin office 70 Office property, Lyon 45 Brahms Quartier, Hamburg 66 *estimate

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