London-based Curzon Global Partners sold 51 German retail assets in prime city center and out-of-town locations to UK investor aAIM for more than €900 million ($1.2 billion)—giving the firm a 3x return for its largest fund, European Property Investors (EPI).
EPI bought the bulk of the German properties in two separate transactions in 2005 when it acquired 35 stores leased to home improvement chain Praktiker and 16 fashion stores leased to SinnLeffers.
In a statement, the firm said that the properties, called the Gemini Portfolio, totals 400,000 square meters of retail space and is 55 percent let to PraKtiker, 42 percent to SinLeffers with the remaining three percent let to Droguerie Muller.
EPI raised €769 million when it closed in 2004. Unlike many of the funds managed by Curzon and its affiliate AEW Europe, which tend to be core-plus, EPI is further up the risk spectrum with a target return of 16 percent, as opposed to less than 13 percent for its other funds. The vehicle's strategy has been to invest in value-added and opportunistic transactions in the retail, office and logistics sector in Europe.
“We've been heavily invested in Germany and we remain committed to investing in that country,” Ric Lewis, chief executive of Curzon, said in a statement announcing the sale. “The transaction was to return to market weighting for the EPI Fund and our European portfolio in general.”
In June, Lewis told PERE that Curzon was generally selling assets ahead of its business plan.
The sale comes at a time of flux as liquidity problems wreak havoc in the market. Two days after the firm released details of the German transaction, Lewis said in a second release that property investment in Europe is set for a “rougher ride.”
“Even with all the money around in the system, equity won't be able to replace debt in the market as it's just not as fast moving,” he said. “Our sense is that after a decade of strong absolute returns, property is in for a somewhat rougher ride that will need to be navigated very carefully.”
The firm said “shock waves” from the sub-prime mortgage crisis in the US could stifle investment activity in Europe for the remainder of the year and lead to casualties among the highly-leveraged players as banks tighten credit lines.
Curzon managing director and head of research and strategy, Simon Martin, said he thought the market could return to conditions in the late 1980s and early 1990s where “everybody is waiting for the end of year valuations to come in.” “Activity simply dries up in the final quarter,” he said.
Doughty makes Blythe purchase
Doughty Hanson and US-based REIT Liberty Property Trust have acquired Blythe Valley Park from UK REIT British Land for £161 million ($322 million; €232 million). The site, comprised of 257 acres with dedicated access to the M42 highway in the West Midlands, contains 14 office buildings with approximately 500,000 square feet of space. According to Doughty Hanson, a second phase of development is planned for an 800,000-square-foot addition. The acquisition is the second joint venture between Doughty Hanson and Liberty: The two worked together to acquire the 535,000-square-foot Kings Hill business park in Kent. Doughty Hanson European Real Estate Fund II has committed £58 million of equity to the acquisition, including funding for further development of the project.
Aberdeen outbid in Norway hotel battle
Aberdeen Property Investors was trumped last month in its bid to buy Norwegian hospitality group Norgani Hotels for 3.5 billion Norwegian crowns ($612 million; €442 million). Rival Oslo Properties, a single-purpose company set up to buy the hotel chain, values Norgani at about 3.6 billion Norwegian crowns. Norgani Hotels is Europe's fifth largest hotel property investor and is listed on the Oslo Stock Exchange. Aberdeen Property Investors has both a dedicated Norwegian fund and a pan-Nordic fund from which to make the investment. The firm is the Stockholm-based property investment arm of the UK firm Aberdeen Asset Management and has more then €12 billion invested on behalf of its institutional clients. Its parent is quoted on the London Stock Exchange.
Quinlan sells Prague office for €90m
Quinlan Private, the Irish private equity real estate investor, has sold Charles Square Center, located on Charles Square in Prague, for €90 million ($125 million) to Commerz Grundbesitz Gruppe for the German's group's open-end public property fund, hausInvest global. The nine-story building, which was completed in 2002, is almost fully let. It covers a gross lettable area of approximately 20,000 square meters, about 15,000 square meters of which is office space. The sale comes a month after Quinlan acquired The Atrium office properties in Amsterdam for approximately €200 million from New York-based real estate firm Tishman Speyer.
Carlyle beat on London deal
Carlye has reportedly been bested to a prominent London development site by Spanish property group, Metrovacesa. The US private equity firm teamed up with London-based Helical Bar to bid on a 1 million-square-foot development, Walbrook Square. Insurer Legal & Genera is looking for a partner to carry out the redevelopment. According to Metrovacesa, it will pay £240 million ($480 million; €346 million) for the 3.7-acre site on Queen Victoria Street and spend a total of €1 billion redeveloping the site into four buildings. Carlyle was successful in acquiring European factory outlet mall developer Freeport when shareholders representing 96.94 percent of the company's stock accepted a takeover.