Corestate Group has agreed to inject up to €10m of equity into the recapitalisation of a high-street portfolio comprised of 20 mixed-use properties across 16 German cities, valued at €55m.
The bilateral bank financing was provided by one German senior lender and two junior Danish lenders, both of which are now covered by the Danish bail-out fund. The original financing has been restructured, resulting in a waiver of senior debt interest and junior principal, following nine months of negotiations.
Following the distressed transaction, which is set to be completed in mid-February and was acquired from the existing owner (a Danish fund management business), Corestate has €45m of its €300m German commercial property fund left to deploy. The fund targets a 15% internal rate of return net after gearing, which takes its capacity up to €250m with leverage. With the ability to co-invest up to €280m in deals, the capital will be spent in Germany by the middle of this year.
In a separate deal, the company recently bought a €230m portfolio comprising 3,000 apartments in Berlin and a government-let office building in Stuttgart from a private German owner that had purchased the assets during the peak of the German real estate market.
Phillip Burns, Corestate’s chief executive, said: “The complexity of this transaction is characteristic of the challenges facing German/European real estate markets in particular. We expect to see this replicated in an increasing number of stressed situations.”