- Two commercial properties acquired in the Dresden city centre for the Real Value Fund
- Both properties feature attractive upside rent potential
BNP Paribas REIM Germany recently acquired two assets situated in the Dresden city centre for the Real Value Fund. The properties are located near the historic heart of the city. The Real Value Fund is a German real estate special fund structured for institutional investors. BNP Paribas REIM Germany and Edmond de Rothschild REIM (formerly the Cording Real Estate Group) launched the fund collaboratively in 2015. The contracting parties have agreed not to disclose the purchase price.
One of the two assets is a six-storey building that features modern office space and is considered one of the best properties in Dresden. The building was completed in 2008 and is in excellent condition. Of the roughly 10,600 sqm of rental space, just over 8,800 sqmis office space let to a strong-covenant anchor tenant that generates roughly 75% of annual rental income. The remainder of the space is retail space let to nine commercial tenants. Tenants have access to a total of 227 parking spaces in the building’s own underground car park. The property is fully let with a combined WALT of four years.
The other property is a V-shaped building that was built in 1996. Total space at the building encompasses roughly 9,200 sqm and is used as a mix for office and medical tenants. The building is fully let to six commercial tenants who also have access to a total of 50 parking spaces in the underground car park. The main tenant at the property is a company from the public sector that accounts for roughly 60% of total rental income. The combined WALT of all leases comes to 6.2 years.
“Dresden and the surrounding area make up one of Germany’s strongest economic regions. With this reputation, the city already offers attractive yields for real estate investments. Beyond that, we see also an opportunity for a considerable increase in value for both assets due to catch-up effects in the area. Thanks to stable cash flow combined with a rent level that is below market, both properties will significantly boost fund portfolio performance,” Isabella Chacón Troidl, Chief Investment Officer of BNP Paribas REIM Germany, explains the logic behind the acquisition.
The area surrounding both properties is characterised by small and medium-sized companies in the retail and services sectors as well as hotels and a variety of restaurants and eateries. Key highlights in the city such as the Altmarkt, Neumarkt, Theaterplatz and Schlossplatz squares are all within just a few minutes’ walk. One of the properties is located in the immediate vicinity of the Zwinger palace and palace gardens. Excellent access to Dresden’s public transport network (tram and suburban train) combined with close proximity to a number of federal highways and fast access to transregional routes add to the attractiveness of the assets.
The Real Value Fund invests in commercial real estate in Germany in line with a manage-to-core/value-add strategy. The fund holds a total of seven properties including the current transaction and currently manages the capital investments of seven institutional investors: two insurance companies, two pension funds, a pension insurance carrier and two banks. The plan is to continue to grow the fund in the near future. Fund performance in the previous fiscal year calculated according to the BVI method came to 16.5% with an average 9.3% per year since the fund was issued.
Hogan Lovells served as legal advisor to the buyer and CBRE acted as technical advisor.
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