Two big recent moves for France-headquartered global investment group Eurazeo that will be of interest to German real estate players: one on the light industrial front, and the second a new joint venture with Canada's PSP Investments to buy into European hotel assets.
Firstly, the light industrial. Eurazeo bought six mixed-use commercial properties in different Berlin neighbourhoods from well-known light industrial property manager GSG Berlin (Gewerbesiedlungs-Gesellschaft mbH) from expanding Czech group CPI Property Group.
The acquisition is the first German investment in Eurazeo’s latest pan-European real estate investment program, Eurazeo European Real Estate II, which is now deploying across all its core markets including France, the UK, Spain and Italy, and is focused on assets with clear value-add potential.
The GSG portfolio in Berlin is made up of 34,000 sqm of lettable space in sought-after ‘loft style’ brick buildings, across the buoyant, well-connected Berlin submarkets of Kreuzberg, Schöneberg, Neukölln and Reinickendorf. Eurazeo says the assets, located in supply-constrained submarkets with rental levels which are below market rents, are ideal candidates for a refurbishment / (re)-development strategy, offering significant value creation potential through capex driven rental reversion.
Eurazeo has committed €74 million of equity to the investment including plans to undertake a selective capex program to modernize the assets and improve their sustainability profiles.
Riccardo Abello, Eurazeo managing director for real estate, said of the GSG deal: "While the Berlin portfolio offers substantial value creation potential, it also benefits from limited competition due to the constraints on future commercial supply in the densely-built neighborhoods they are located in, and the property’s unique loft-style architecture and brickwork character.
Head of Real Assets at Eurazeo, Renaud Haberkorn, added: "As the Berlin real estate market starts to mature, the focus shifts away from market headline growth to value creation via granular asset management. We have identified various levers to create additional value within this mixed-use portfolio, through site (re-)developments, densification and significant renovation of existing units."
In the hotels sector, Eurazeo has formed a strategic joint venture with Canada's giant Public Sector Pension Investment Board (PSP Investments) to invest into European hotels.
The JV plans to invest up to €300m of equity in large assets or portfolios of hotels which could benefit from upgrades and more active asset management. (This could cover quite a wide range of properties, two years in to the COVID pandemic - REFIRE).
The JV has already agreed to by FST Hotels in Spain, a five-hotel, 800-room group mainly focused on Madrid and Barcelona. The group operates under the Ayre brand, and the sellers are Grupo Empresas Matutes and El Corte Inglés. The whole portfolio will be upgraded, refurbished, repositioned and re-branded as part of the recovery strategy.
Stephane Jalbert, head of real estate investments at PSP, said he was excited to team up with Eurazeo's proven expertise in the hospitality sector - "We anticipate the hospitality sector in Europe will present an attractive recovery play as travel resumes and, together with Eurazeo, are working to capitalise on this opportunity."
