ASG funds sell last German office building as real estate strategy for Germany shifts to corporate acquisitions
Jersey (UK), March 5th, 2018 – ActivumSG Capital Management Ltd. (ASG), the specialist in turnaround situations in European real estate, has completed the sale of the last German office property owned by funds that it manages. The sale highlights a shift in focus by ASG’s latest funds onto corporate acquisitions as a way to access attractive value-add opportunities in German real estate.
ActivumSG Real Estate Fund II sold the Theo & Luise building in Mannheim, 55 miles south of Frankfurt, to TLG Immobilien for €47.6 million, a price that reflects a net initial yield of 5.9%. The 2011 vintage fund had purchased the 26,000 sm Grade A property from an affiliate of RBS, which had held it in a non-performing loan portfolio.
Saul Goldstein, Founder and Managing Partner of ActivumSG,, said: “We are very cautious about direct property investments in Germany today. This sale ends a successful theme of early ASG funds, where we anticipated that repositioned assets in medium-sized German cities would attract institutional demand as the Big Seven cities got too competitive. Private equity investments or mezzanine lending generally appear the best way to access strong real estate themes in Germany for our newest funds, since their complexity allows us to avoid the crowds and to generate value-add returns for our investors.”
ASG announced in January that its fifth fund has attracted €489 million of commitments from global investors at its final close for investing in Spain and Germany. The fund started 2018 by acquiring fairvesta, a German real estate fund management platform for retail investors. Its other investments include mezzanine financing for various developments in Berlin as well as residential development and land purchases in Spain.
The Theo & Luise building sold to TLG is currently 89.4% occupied and the largest tenants are Deutsche Telekom (through Generalmietgesellschaft GMG), Camelot Management Consultants and Euromaster. The property provides parking for 401 vehicles.
The property is in Fahrlach, on the eastern edge of Mannheim, which is a popular office location due to its proximity to the City Airport. The region is a hub for transportation and industry in Germany.
Richard Wartenberg, Head of Real Estate at ActivumSG Advisory GmbH, said: “This investment was a lease-up story following the departure of two large tenants, which left us at one point with a 56% vacancy rate. We transformed the property into an institutional quality asset through modernization works and a focused leasing campaign. Market conditions have certainly made it harder to find opportunities of this kind. We’re still open to making direct acquisitions, but only when we find buildings with a compelling investment case for adding value.”