This is Brookfield’s maiden investment in Germany, eclipsing NorthStar’s €1.1bn pan-European prime office portfolio almost 12 months ago, and is the country’s largest transaction for eight years. The trade also highlights a trend among global investors of deploying capital on a city versus country basis.
Brookfield, which completed an initially acrimonious £2.6bn takeover of Canary Wharf Group with Qatar Investment Authority in April, is still finalising the senior debt financing package. The €1.3bn price, which reflects a 4.1% net initial yield, is less than the €1.4bn SEBAM paid back in 2008 and below the initial reported €1.5bn asking price.
Fosun International, backed by Chinese billionaire Guo Guangchang, and Ping An Insurance, China’s second-largest insurer, were previously separately linked to 18-strong complex of luxury hotels and office towers as early as last year, prior to Savills’ acquisition of SEBAM for €21.5m in March from SEB, the Swedish banking group.
The Potsdamer Platz portfolio, developed on land previously divided by the Berlin Wall, comprises around 5.4m sq ft of offices, apartments, public plazas as well as hotels a cinema and a shopping mall.
The portfolio is held in the inherited ImmoInvest mutual fund from SEBAM which by law must be dissolved by April 30, 2017.
The global financial crisis exposed the fundamental flaw in Germany’s €82bn real estate mutual fund industry, which ultimately has led to a raft of enforced liquidations. Under the regulatory environment, investors were entitled to daily liquidity, while managers could not meet redemption requests given the illiquidity of real estate.
The sell down of German open-ended fund (GOEFs) assets has been ongoing since 2012, with a further €10bn expected before the end of 2017, according to recent research by Cushman & Wakefield.
“We are delighted that such a high-profile investor as Brookfield has agreed to acquire the real estate portfolio. This emphasises the international significance of Potsdamer Platz as a sought-after business centre and a superlative and vibrant part of Berlin”, said Axel Kraus, managing director of Savills Fund Management in a statement.
Nils Hübener, Head of Investment at Savills Fund Management, added: “The sale of such a highly diversified property portfolio as Potsdamer Platz Quarter is further proof of our ability to execute large, highly complex portfolio transactions.”
Tenants include ICBC – China’s largest bank – Etihad Airways, Hubert Burda, TollCollect, the representative office of the Daimler Group, Habitat, and law firms Freshfields, Raue LLP, Olswang and Morrison & Foerster LLP.
Eastdil Secured sold Potsdamer Platz on behalf of Savills Fund Management.