Cerberus Capital Management closed the acquisition of German two of real estate portfolios out of administration, Project Phoenix and Project Monsoon.
The Phoenix portfolio comprises nine shopping centres, across 995,000 sq ft in Western Germany, including Marktpassage Bielefeld, a shopping centre in Bielefeld, Seerhein Center, a retail scheme in Constance and a fully let retail warehouse scheme near Nuremberg.
CoStar News broke the story that Cerberus had won Project Phoenix last October, with the portfolio acquired out of administration from a defaulted legacy Wachovia loan, which was acquired by Wells Fargo, when the two banks merged at the turn of 2009.
Wells Fargo, in collaboration with Phoenix sales agents Eastdil Secured and Jones Lang LaSalle, selected Cerberus as the preferred bidder at the end of September after edging out Morgan Stanley Real Estate Funds to win the portfolio.
The private sale, following a competitive process, enabled Wells Fargo to remove the non-performing loans associated with these properties from its balance sheet. The insolvency administrator was BBL Bernsau Brockdorff & Partners.
Project Monsoon comprises 10 retail properties which Cerberus purchased on an all-cash basis through a multi-level tendering procedure led by Dutch insolvency administrator Barend de Roy van Zuidewijn of the law firm AKD, have an aggregate floor space of 263,677 square metres.
Cerberus Project Monsoon acquisition reflected a 41.2% discount, or just under 58 cents in the euro, on the outstanding €381.78m whole loan balance, for which the senior loan was securitised in RBS’ synthetic EPIC Drummond CMBS.
Brack Capital Real Estate, the US and European-focused real estate developer and manager, was the underbidder.
Cerberus is expected to finance the acquisition within the next month, at between 60% to 65% loan-to-cost, implying a financing ticket of up to €145m.
Lee Millstein, senior managing director at Cerberus, said: “The acquisition of these portfolios further enhances Cerberus’s footprint in the German real estate market. These mutually beneficial transactions enabled the sellers to obtain fair value, while providing us with the opportunity to inject fresh capital and spearhead the turnaround of the properties.”
ACREST Property Group, one of the leading letting companies for asset management and development of retail real estate in Germany, has been engaged to coordinate asset management, letting and property development for properties in both the Phoenix and Monsoon portfolios.
With this engagement, ACREST will build on the success ACREST and Cerberus achieved working together on various portfolios over the last few years, amongst others Woolworth and Metro Cash & Carry stores and the Rebound portfolio.
ACREST manages approximately €3.7bn in assets in Germany, including nearly 400 properties totalling 2.5m square metres of floor space.
Stefan Zimmermann, managing partner at ACREST, added: “Managing the Monsoon and Phoenix properties further strengthens the long-standing partnership between ACREST and Cerberus. With our specialised, vertically integrated and focused approach to retail real estate management, we are ideally positioned to enhance the value of these assets through refurbishments, redevelopments and letting.”
Linklaters served as legal advisor to the Cerberus affiliate on the Phoenix transaction. For the Monsoon transaction, Ashurst served as legal advisor to the affiliates of Cerberus.
In 2012, Cerberus acquired the 300,000 square metres Rebound portfolio of 47 retail and mixed-use properties from FMS Wertmanagement, the “bad bank” which spin out of Hypo Real Estate when Deutsche Pfandbriefbank was formed.
Earlier that year, Cerberus acquired the distressed assets of Speymill Deutsche Immobilien Company, the 22,000-strong German multi-family portfolio, financed by a restructuring of €985m of legacy debt.
In 2011, Cerberus acquired a 900,000 square metres portfolio of Metro Cash & Carry wholesale-retail properties located in urban centres throughout Germany.
In Germany’s largest initial public offering of 2011, Cerberus and a co-investor listed Berlin-based GSW Immobilien AG on the Frankfurt Stock Exchange following the successful restructuring of the company and improvement of its assets.