This article is from the Australian Property Journal archive
Babcock & Brown and GPT Group have offloaded a 51% shareholding in their $2 billion German residential portfolio to a Colonia Real Estate AG.
Colonia has bought a majority stake in a 10,100-unit portfolio currently held by BGP Investment S.a r.l. – a joint venture between the Babcock & Brown and GPT and Babcock & Brown Residential Property 1 S.ar.l. & Co. KG.
The parties have not disclosed the sale price. However, as at June 30, 2006 GPT and Babcock & Brown valued their entire 31,349-unit German/Berlin residential portfolio at $2.02 billion.
The residential units are located in the cities of Aachen, Freiburg, Hamburg, Kiel, Koln, Osnabruck und Salzgitter have an aggregate of 623,000 sqm of lettable space.
Approximately 85% of the space is let at present, currently generating an annual net rental income of almost €30 million ($A50 million).
Colonia Real Estate AG is a listed real estate investment and management group focusing on the German market.
As part of the agreement, Colonia Real Estate AG has the right to acquire the remaining 49% of the companies until November 30, 2008.
The sellers have an option to sell their remaining stakes to Colonia Real Estate AG that may be exercised until June 30, 2009 in the event Colonia Real Estate AG does not exercise its call option.
The purchase price for the 51% stakes and the exercise price on both the call and the put option are based on a current valuation of the companies.
The shareholding sale will sooth analysts’ criticisms of GPT’s JV with Babcock & Brown.
Since May 2005, Property Investment Research’s head of research John Welch had viewed the JV in unfavourable light.
Welch said that GPT was trading its prized Australian retail assets for aging apartments blocks in the former Soviet Union.
He added that had the apartment blocks been held in Western Europe like the United Kingdom, Netherlands and Germany, at least there was economic stability.
“Not only is it a significant distance from Australia, the assets are in an area with significant economic problems. Anyone in Australia will tell you what a nightmare it is to manage aging assets let alone apartment assets,” Welch added.
Australian Property Journal
