CLS Holdings buys 12 office properties in Germany

Property investor CLS Holdings has continued its strategy of increasing its presence in Germany with the acquisition of a portfolio of 12 office buildings for €148m (£131m) cash.

The 963,596 square feet of multi-let properties are judged to have a gross asset value of €152.2m excluding costs, which represents a net initial yield of 6.3%.

Located mostly in clusters around the major cities of Hamburg, Düsseldorf and Stuttgart, the properties have a current occupancy rate of 89% from 157 current tenants, with a weighted average unexpired lease term of 3.3 years, currently generating a net rent of €10.1m a year.

The top five tenants, representing 28% of contracted rent, comprise Bosch Group, Panalpina World Transport, Alpine Electronics, Level 3 Communications and The State Government of North Rhine-Westphalia.

This purchase, which is expected to be completed in the third quarter of the calendar year and will be paid for using internal resources, will take the German portfolio to 31% of the group total, up from 23% at the end of 2016.

"This acquisition is a significant step towards our stated goal of increasing our presence in Germany," said chief executive Fredrik Widlund.

"It will add significantly to cash flow and is in line with our strategy of identifying properties in well-located, non-prime areas of major European cities providing highly diversified tenant bases, with scope for us to drive value through local asset management opportunities."

Widlund said CLS had confidence in the broader German market, and the specific sites were chosen in cities where there was a structural shortage of office supply.