IMMOFINANZ Subsidiary Grows Portfolio with $50M Berlin Residential Portfolio

By Eliza Theiss, Associate Editor

Berlin—BUWOG, a wholly owned subsidiary of IMMOFINANZ Group, has announced the acquisition of a 1,185-unit residential portfolio in the greater Berlin area, stemming from an insolvency estate. BUWOG shelled out around $80.6 million (€50 million) for the package—about $58 per square foot (€630 per square meter), declaring an 8.62 percent gross return. Combined, the properties amount to 854,891 square feet of leasable residential space.

Of the 1,185 units 671 or about 60 percent are located in the eastern Berlin district of Marzahn-Hellersdorf, in the Berlin-Kaulsdorf neighborhood. 407 apartments are located in Strausberg, a city nine miles distance from Berlin. Further units are located in Grünheide Mark (64), Sydower Fließ (24) and Fredersdorf (19). The portfolio’s overall vacancy rate is of 4.2 percent, but exists mainly in non-Berlin locations.

The purchase of this portfolio has brought BUWOG’s Berlin apartment holdings to 5,447 units and is in line with the company’s acquisition strategy, which aims to create and grow a strong portfolio in northern Germany. “Berlin is still one of Germany’s most favorably priced large cities for rents and freehold flat prices,” said Riedl, CEO of BUWOG and COO of parent company IMMOFINANZ Group, says. “A process of catch-up has been underway for several years, however. The residential package just acquired will bring good long-term returns; the vacancy rate is low.”

BUWOG has aggressively increased its German apartment portfolio throughout 2013, acquiring a total of 6,073 apartments in six transactions, of which two portfolios in Kassel, one of the transactions taking place in early November. The transaction saw BUWOG acquire 315 apartments for $12.13 million (€9.01 million) from Franconia Invest and CitCor Kassel. Further acquisitions include 885 units in Lüneburg and Syke, a 582-apartment portfolio in Kiel and two separate acquisitions in Berlin, totaling 3,101 units. BUWOG currently holds 8,430 units in Germany and 27,100 units in Austria. The company also has several thousand units in its development pipeline, through its subsidiary, BUWOG Meermann, of which 1,600 units in Berlin and 3,000 in Vienna. BUWOG recently announced the completion of the 108-unit Danubio in Vienna, with the project fully sold out.