Corestate Group, the Zug-based private equity real estate firm, has purchased a portfolio of 3,000 apartments in Berlin and an office in Stuttgart in a deal valued at approximately €230 million.
The firm announced today the portfolio “characterised by a complicated debt structure with multiple lenders” was acquired from a “foreign investor who had purchased the assets during the peak of the German real estate market”. Corestate said it planned to invest further capital to refurbish or upgrade the residential properties.
The office building, let on a long lease to the State of Baden Württemberg, was bought at a yield of 7.4 percent.
Corestate has typically invested in the German residential market via its Corestate German Residential Limited, closed-ended opportunity fund, which closed on just less than €490 million of equity in 2008. This transaction, however, PERE understands to have been made via resources from Corestate’s balance sheet.
Phillip Burns, chief executive officer of Corestate said in the announcement he expected the characteristics of the investment to be replicated in other situations over the next couple of years.
He said: “The complexity of this transaction is characteristic of the challenges facing German and European real estate markets in particular for the banks.”
“The restructuring of debt, dealing with the sensitivities and priorities of multiple lenders is highly complicated and something that we expect to see replicated in an increasing number of stressed situations over the next couple of years.”