Summit Germany buys majority share of GxP German Properties

German commercial property investment company Summit Germany has entered into an unconditional agreement to acquire 72% of GxP German Properties - a company listed on the Frankfurt Stock Exchange - from Consus Real Estate and other minority holders, it announced on Monday.

The AIM-traded firm said GxP owns an office portfolio of around €166m in major German cities - primarily in Frankfurt, Berlin and the state of North Rhine-Westphalia.

It said the portfolio included 12 properties with a lettable area of 106,700 square meters.

As at 31 March, the properties generated net rental income of €10.8m per annum, representing an implied rental yield of 6.6% and a loan-to-value ratio of 59.3%.

At the same date, the properties were 89% let, with a weighted average lease length of 3.5 years.

Summit said GxP generated profit after tax of €15.5m for the year ended 31 December.

The board said the consideration for the acquired shares was €45m, with €40m payable in cash upon completion and a further €5m payable upon the publication of GxP's 30 June financial reports, subject to the achievement of a minimum threshold.

“The acquisition is increasing our portfolio with good assets in central locations,” said Summit Germany chairman Harry Hyman.

“We believe there is a substantial upside due to potential letting of vacancies and the opportunity to streamline the company's operations.”