Starwood makes first major CEE investment

Starwood Capital Group has taken the plunge in the Czech Republic, where it has bought The Park in Prague from Aberdeen Asset Management Deutschland for a reported €300 million.

Not only is the transaction one of the largest in Central and Eastern Europe in several years, but it also marks the first significant deal in the region for the Greenwich, Connecticut-based firm. In addition, the deal is believed to be the largest office transaction ever in the Czech Republic.

Jeff Dishner, senior managing director at Starwood who heads up investment across Europe, explained that the purchase of the 1.2 million-square-foot property, which actually is spread out over 12 buildings, fit perfectly with the firm’s stated objective to buy single assets with “solid cash-on-cash returns” at a discount to replacement cost.    

The Park was developed between 2003 and 2009 by international real estate company AIG/Lincoln, which was established several years earlier by AIG Global Real Estate and Lincoln Property of Dallas. The property currently is 99 percent leased by tenants that include multinationals such as DHL, IBM, Honeywell, Sony, Accenture and Dell.

“We are pleased to be acquiring such a premier, well-performing property in one of the most vibrant economic regions in Europe,” Dishner said. “This transaction fits perfectly in line with our previously announced goal of increasing single-asset transactions with solid cash-on-cash returns at a discount to replacement costs as we look to grow our European presence.”

The facility to refinance the property was underwritten jointly by pbb Deutsche Pfandbriefbank and Helaba. Together, they provided €180 million of refinancing and stated that The Park is “widely regarded as the most successful suburban office park in Central and Eastern Europe.”

Charles Balch, head of international clients for the UK and CEE at pbb Deutsche Pfandbriefbank, said: “This is one of the biggest transactions in the Czech Republic in a long time. Prague remains one of the most attractive investment markets in CEE, and The Park is clearly a trophy asset.”

The Park was sold by Aberdeen, which inherited the asset following the 2007 takeover of DEGI, the German open-ended manager. Following the global financial crisis, several of DEGI’s funds ran into trouble with investors wanting redemptions, and the decision was taken to liquidate them. Four of the buildings comprising The Park are held by Degi Europa, which Aberdeen said began its dissolution back in October 2010, seven by Degi International and another by Degi Global Business.

News of Starwood’s deal came three days after The New York Post reported that the firm had bid for US luxury department store chain Saks Fifth Avenue in an unconnected investment.