Dundee buying €300m of German offices

Canadian firm Dundee International REIT is in the process of acquiring up to €300m of office property in Germany and expects to announce the first deals before end H1.

The company is at various stages of due diligence and negotiation with a number of property owners and has just made a secondary public offering of C$81m (€62m) in Canada to help finance the deals.

Dundee and LSF REIT Holdings, an affiliate of Lone Star Real Estate Fund, have each agreed to sell 4m Dundee International REIT units on a “bought deal” basis to a syndicate of underwriters led by TD Securities at C$10.10 (€7.7) per unit. The underwriters have the option to buy another 600,000 units at the same price. The offering is expected to close on 17 April and the deal will also give Lone Star a holding of 6% to 7.2% in Dundee.

Dundee’s CEO Jane Gavan says that she hopes to announce the first acquisition during the first half of this year and says the assets are all located in major cities and are let long term.

Dundee, which has its European headquarters in Frankfurt, Dundee also has offices in Munich and Leipzig and 14 staff on the ground in Germany, is building a substantial portfolio in Europe and in February completed the purchase of a 99.74% of Grammophon Büropark – built on the site of the former Deutschen Grammophon record label headquarters in Hannover, Germany – for about €25.8m and an indirect interest in the remaining 0.26% of the approximately 211,000 sq ft (19,600 m²) office scheme which was 95% let when Dundee bought it.

Dundee currently holds 12.5m sq ft (1.16m m²) of office, industrial and mixed-use property in Germany. This includes a portfolio of 295 buildings, including office, logistics and residential assets, nearly 75% of which is let to German mail and logistics group Deutsche Post. This portfolio was bought last year from Luxembourg-based Lorac Investment Management, a Lone Star subsidiary.

Dundee raised €268m through an IPO to help fund the acquisition.