Godewind Immobilien AG, a publicly traded real estate company specializing in German commercial property, has agreed to acquire two further office properties.
One office is in Frankfurt am Main and one in Hamburg-Eppendorf, with a total rental area of 74,452 square meters (801,395 square feet) and a total of 1,349 parking slots. The total purchase price amounts to around €205 million ($233 million).
Corresponding to the investment strategy of Godewind, these latest acquisitions again comprise office complexes in attractive locations, with considerable potential for value appreciation. The vacancy rate for the property in Frankfurt amounts to around 35.7 percent and for the property in Hamburg around 10.6 percent.
The two properties generate annualized rental incomes of around €9.4 million ($11 million). This equates to a gross initial yield of roughly 4.6 percent. The anchor tenants include various public service companies as well as European service and industrial companies. The weighted average lease term for the Frankfurt property is around 5.6 years and for the Hamburg property around 3.0 years.
Godewind will significantly improve these KPIs based on proactive asset management. The potential for development will be raised, among other things, by reducing vacancies, rent increases and lease renewals with anchor tenants. The actual average rents for the Frankfurt property is €11.20 ($12.7) per square meter and for the Hamburg property it’s €12.90 ($14.66) per square meter; both are below current market rents. The planned vacancy reduction and the market rent adjustments will be discontinued by 2021 at the latest. The real estate then will generate around 30 percent higher rental income of more than €12 million ($14 million) per year. The average “funds from operations” (FFO) before “overheads” would then amount to approximately €8.5 million ($9.66 million).
