Project Traction and Aqua portfolio second round bids in amid flurry of live pan-European deals

Second round bids have been submitted for two large multi-country European office portfolios, amid a flurry of such deals across the Continent.

CoStar News understands that IVG’s rump pan European office portfolio – dubbed Project Traction – has received second round bids from Goldman Sachs, Ares Management and Oaktree Capital Management. Bids were submitted last Friday.

By value, Project Traction is comprised of approximately: 40% in France; 35% in the Netherlands and the 25% balance across Spain, Belgium, Finland and the UK.

The portfolio needs considerable asset management with a blended vacancy across the 30-strong pan European office portfolio of around 30%.

Pricing is expected to fall between €410m and €420m, based on an annual income of circa €30m.  

CBRE is selling Project Traction on behalf of IVG. A preferred bidder is expected to be identified by early next week.

In the second of the two larger pan-European office portfolio deals currently live, Union Investment received second round bids yesterday for the €975m Aqua portfolio.

CoStar News understands that two of the finalists were Ares Management – again – and NorthStar Realty Finance.

The Aqua portfolio – is comprised of stabilised office buildings across as London, Paris, Vienna, Helsinki, Frankfurt, Munich and Rotterdam.  The assets are drawn from a mix of Union Investment’s various private and institutional funds.

A sale at the carrying valuation of €975m would reflect a 5.75% net initial yield. However, the final price could reach €1bn. The annual income is around €60m and the 278,000 sq m portfolio is around 90% leased. The weighted average unexpired lease term is almost seven years.

There is a raft of portfolios at various stages including three pools of assets sold by Archon Group, the asset management platform wholly-owned by Goldman Sachs which disposes of assets owned by Whitehall series of opportunity funds.

Two of the three portfolios, named the Emily and Archer, are both comprised of German offices.  The third Archon portfolio is expected to be comprised properties in the Netherlands.

JLL is selling the 26-strong Emily office-dominated portfolio with assets located in secondary cities in Germany.

The portfolio, by value, is comprised of: 72.6% in offices; 7.3% hotels; 5.2% warehouses; 4.3% retail; and the balance in other niche assets, including 4.8% in car parks.

By income, the Emily portfolio has a concentration of €10.6m out of a total of €22.8m in five cities: Munich, Hamburg, Hanover, Berlin and Cologne.  

The Archer portfolio comprises 11 core office properties, over 196,000 sq m, predominantly located in seven of Germany’s top seven prime office markets.

The portfolio generates a gross rental income of €18.4m per annum, while there is a 28.3% vacancy rate. The portfolio’s WAULT is 4.7 years, ranging from 1.8 to 10.3 years at the property level.

Elsewhere, the Bridge portfolio – a six-strong pool of stablised and opportunistic offices across Germany formerly owned by Eurocastle – has moved to the final stage with four finalists, which are comprised of atypical joint venture partnerships between private equity firms with core investors.

There has also been hedge fund interest, enticed by the yield on assets secured by German government tenants relative to the country’s gilt yields.  

Davidson Kempner, which owns the junior loan underneath the securitised senior Bridge loan, is thought to be through. PwC is selling the Bridge portfolio through receivership on behalf of Hatfield Philips International, the special servicer.  A previous report can be seen here.

Raiffeisen Capital Management is selling the circa €100m Strauss portfolio, a five-strong logistics portfolio with assets in France, Poland and Germany. Second round bids are approaching.

Finally, MetroInvest – a vehicle which owns nine prime offices in Barcelona, Madrid, Paris, London, Munich, Frankfurt, Hamburg and Düsseldorf – has pulled the sale of its portfolio, in an aborted sale dubbed the Quales portfolio.  

MetroInvest is 30% owned by Metropolis and 70% owned by private investors, colleactively the portfolio is valued at around €250m.

There is speculation that the sales process could have been a valuation exercise with Metropolis potentially seeking to acquire the 70% in MetroInvest it does not already own.

The nine offices are located at: 60 Monceau and 7 Avenue Messine in Paris; Brooktorkai and Alstertor in Hamburg; Banco Sabadell and Albarracin in Madrid, Dominion Street and Moorgate in London; and Wolkenbugel in Dusseldorf.

About CoStar News

Finance Editor, CoStar News
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