BlackRock Real Assets’ Eurozone property fund completes first two acquisitions
The BlackRock Eurozone Core Property Fund, which held its first close in May 2018 and raised EUR415 million from eight institutional investors, has made its first two acquisitions in Germany.
Both transactions are consistent with the fund’s multi-strategy approach; targeting reversionary assets, low vacancy assets, and assets in transitional markets, in an attempt to capitalise on emerging trends.
The first acquisition is a Grade A freehold office property in the “City Sud” submarket of Hamburg, which is a key market within the German investment strategy for the Fund. The 15,700-square metre building was built in 2011 and is 94 per cent occupied by multiple tenants, presenting an opportunity to capture market rental growth through asset management. City Sud is a growing submarket, benefiting from affordable rents compared to central Hamburg, as well as expansion of business activity into the area. The building is a short walking distance from the Hamburg-Hammerbrook S-Bahn station, which is one stop away from Hamburg’s Central Station. The BlackRock Eurozone Core Property Fund was advised by Clifford Chance, Drees & Sommer and KPMG.
The second acquisition is a portfolio of two Grade A freehold logistics warehouses located in the Munich and Regensburg metropolitan regions. The properties, totalling 43,000 square metres, were recently built (2017 and 2014 respectively). They are fully occupied by a strongly-rated single pharmaceutical logistics tenant for a remaining term upwards of 9 years. This investment provides the Eurozone Core Property Fund with an exposure to modern high-quality logistics assets in two very strong logistics locations within Germany. The BlackRock Eurozone Core Property Fund was advised by Clifford Chance, CBRE PREUSS VALTEQ GmbH, LogiVest and PwC.
Ian Williamson, Portfolio Manager of the Eurozone Core Property Fund, says: “We are very pleased to have secured our first two investments in sought-after sectors within Germany, which is currently a highly competitive investment market. These deals demonstrate the strength of our local German investment team, who have successfully sourced high quality product, and completed detailed due diligence processes under tight timeframes. We believe these acquisitions are a strong fit for the Fund given positive economic and demographic forecasts for Germany, and deal-specific characteristics. We expect them to be accretive to Fund returns while also remaining liquid in the long run. Both acquisitions are DGNB Gold-rated, and fit within the Fund’s environmental strategy.”
“Both transactions support the Fund’s offering, which seeks to provide a stable income return to investors from what we believe are secure and enhanced sources of income. Following its first two acquisitions, the fund has an active pipeline of investments and is expected to seek to diversify its exposure by targeting further investment in France and the Nordics.”