Volume 7, Issue 129, February 3rd, 2015 KKR and DIC bundle German real estate Inside REFIRE interests to create sizeable new force REFIRE is a specialised report focused on providing market intelligence and back- In a number of statements last year about the future of Germany’s list- ground analysis to finance professionals ed commercial real estate sector, Ulrich Höller, the head of the listed in German and continental European real Frankfurt-based DIC Asset AG forecast a likely wave of consolidation in estate investment. the sector, similar to what the German residential sector is experiencing. Whatever your particular area of speciali- Höller was likely speaking with an in- SEB in further portfolio sell- sation, we think you’ll find timely, incisive sider’s understanding of how such steps off, NorthStar enters Europe information within our pages, helping to in- would be realised in practice. Earlier this The big news around the turn of the year form you of the key deals, the numbers, the month Deutsche Immobilien Chan- was the December acquisition by US REIT markets, the players and the people. cen (DIC), one third owner of DIC Asset NorthStar Realty Finance of a €1.1bn of- AG and likewise headed by Höller, an- fice portfolio from Frankfurt-based SEB The areas we focus on are: nounced that it was partnering in a new Asset Management. This was the Amer- investment vehicle with prominent US ican group’s first foray into Europe and US Funds in Europe private equity firm KKR to invest in Ger- they have topped that off with a further European REITs many’s office and retail sectors. The new deal worth reportedly €500m see page 2 German Real Estate Finance company, GEG (German Estate Group), German Non-Performing Loans (NPLs) is likely to become a significant investor Trouble ahead for German Retail Property Funds in German commercial property. closed-end funds with Swiss Mortgage Securitisation GEG will invest its own capital as well borrowings CMBS/RMBS as third party money, and will be KKR’s The recent revaluation of the Swiss Franc Privatisations sole route into German real estate. The versus the Euro will cause mayhem for Refinancing primary focus will be core property, but it countless German closed-end property Euro-zone Property Financing will also invest in riskier assets and proj- funds, according to a new study by the ect developments. Berlin-based rating agency Scope. At REFIRE has an extensive network of con- The new group will be headed by the very least the forecasted yields for tacts in the field of continental European Höller, and will see Deutsche Immobilien numerous funds who took out Swiss real-estate finance, which enables us to Chancen, which is backed by investment Franc-denominated loans see page 6 bring you the latest and most relevant news. companies and insurance firms, trans- However, we always want to know more ferring its operational business to GEG, Climate for financing in Ger- about what’s going on in this dynamic sec- including about 40 professionals who many hits record high tor, so make sure your company is keeping will continue to manage its major current The FAP-Barometer, now well-estab- us informed of your moves. Send your me- project developments MainTor in Frank- lished as a German index for measur- dia communications to news@refire-online. furt and the Opera Offices in Hamburg. ing the real estate financing climate, com for our consideration. Höller will resign as CEO of Deutsche showed it highest-ever reading for the Immobilien Chancen Group, but will re- first quarter of 2015, indicating that the main as head of DIC Asset until the end environment for financing commercial CONTENTS in this Issue: of 2015. DIC Asset manages more than property has never been as goodpage 12 €3bn in assets for itself and third parties DEALS ROUNDUP / from page 3 in a fund division launched three years AIM-listed Summit Germany EDITORIAL / page 4 ago. It posted FFO figures for 2014 of raises €120m in share placing REPORT - /ROUNDUP page 10 €48m, up 5% on 2013, while buying Summit Germany, the AIM-listed and UPCOMING EVENTS / page 29 property assets for €180m and selling Guernsey-headquartered specialist for PEOPLE…JOBS…MOVES / assets worth €162m. German commercial real estate, has SUBSCRIPTION FORM / page 34 In a statement, Deutsche Immobilien raised €120 million by issuing 171.4 mil- Chancen said, “GEG will be an active lion shares at 70 euro cents each in an investor across the core sector, oppor- oversubscribed placing with see page 8 2 ................................................. DEALS ROUNDUP tunistic transactions with appreciation he added. GEG will also seek €50m-plus REFIRE potential, and development transac- developments, including high-end resi- Real Estate Finance tions. GEG will invest its own capital and dential, in the 10 largest German cities. Intelligence Report Europe third-party money.” “We will start slowly this year but we’re “The creation of GEG is a continua- seeing offers already coming in.” tion of KKR’s commitment to German Operating Office investments, having built a successful REFIRE Habsburgerallee 95 investment track record, with more than Germany/Open-ended funds 60385 Frankfurt am Main, GERMANY $4.4bn of equity deployed in 15 Ger- SEB in further giant portfo- Tel: +49-69-49085-785 man companies since 1999,” the state- Fax: +49-69-49085-804 lio sell-off, NorthStar enters Email: [email protected] ment said. It is also an important step Europe for KKR’s real estate platform which has Managing Editor: committed over $1.6bn of equity to 26 The big news around the turn of the Charles Kingston Tel: +49-69-49085-785 deals worldwide since its launch in 2011. year was the December acquisition by Fax: +49-69-49085-804 In the first phase DIC will hold a 75% US REIT NorthStar Realty Finance of Cell: +49-172-8572249 majority of the new business, but KKR a €1.1bn office portfolio from Frank- Email: [email protected] says it plans to acquire further shares furt-based SEB Asset Manage- Subscriptions: in the medium term and become a 50% ment. This was the American group’s Tel: +49-69-49085-785 joint partner. A report in Reuters suggest- first foray into Europe, and they have Fax: +49-69-49085-804 Email: [email protected] ed that KKR plans to topped that off with a fur- pump at least €5bn “The creation of GEG ther deal worth reportedly Advertising: over the next five about €500m from Ger- Tel: +49-69-49085-785 is a continuation of Fax: +49-69-49085-804 years into the Ger- KKR’s commitment to man insurer Provinzial Email: [email protected] man office and retail German investments, NordWest. segments. having built a success- The deal made head- Editorial Advisory Board: Klaus H. Hausen Ralph Rosen- ful investment track lines both because of its Colm O’Cleirigh, B.Arch.Sci. berg, KKR’s global record, with more than size but also for its com- Margarete May, Rechtsanwältin head of real estate, plexity, spanning seven David Scrimgeour, MBE $4.4bn of equity de- Christian Graf von Wedel commented: “With ployed in 15 German different countries and Glenn J. Day FRICS this new platform, we companies since 1999,” tax regimes, and the fact Andreas Lehner will be able to accel- that, in comparison to Stefan Engberg, MRICS erate our access to investments in Ger- earlier large-scale deals, there was no Publisher: many across the risk spectrum.” ‘volume discount’ given the size of the REFIRE Ltd., At a press conference in Frankfurt two portfolio. Additionally, the sale went 49 Sandymount Avenue, Ballsbridge weeks ago, Ulrich Höller said that the through including an asset management Dublin 4, Ireland listed DIC Asset AG, primarily respon- mandate for the seller, which is unusual. sible for asset management, would not The structured sale by SEB Asset Real Estate Finance Intelligence Report Europe initially form part of the new GEG vehicle. Management, which is in the process (REFIRE) is published 22 times a year, at the be- ginning and in the middle of each month, with “DIC Asset is not part of the deal as re- of unwinding its international German two holiday breaks. REFIRE is editorially inde- turn expectations from the US were too open-ended fund, involves 11 ‘Class A’ pendent of any selling or investing institutions. In- high. However, joining may be an option European office properties are in London, formation contained in REFIRE is under copyright protection and is based on sources believed to for the future as consolidation will be a Paris, Hamburg, Milan, Brussels, Rotter- be reliable, though their complete accuracy can- major theme in the overall commercial dam, Amsterdam and Gothenburg. The not be fully guaranteed. Neither the information real estate market going forward.” portfolio consists of 186,300 sqm with contained in REFIRE nor the opinions expressed therein constitute or are to be construed as con- As for GEG’s investment strategy, said a well-diversified mix of market leading stituting an offer or solicitation of an offer to buy Höller, GEG will focus on investments in tenants and includes high-profile office or sell investments. REFIRE accepts no liability trophy assets above the €80m mark and, buildings such as Condor House and for actions based on the information herein. investing alongside other institutions, on Portman Square House in London, Dre- © 2015 REFIRE Ltd. opportunistic investments – as soon as hbahn/Dammtorwall and Valentinskamp that market picks up again in Germany, in Hamburg, Issy-les-Moulineaux in Paris 3 www.refire-online.com The property world will gather in Cannes.