Europa Capital was again a net seller of stabilised investments from its value add funds in 2018 as it continued to leverage the strong investor interest for stabilised office and residential assets with total transaction activity for the year reaching €1.34 billion including contracted sales of €785 million.
The majority of sales were undertaken on behalf of Europa Fund IV and in the office sector, however, one of the stand out sales was the opportunistic disposal of the Plac Malachowskiego office building in Warsaw from the most recent value-add fund, Europa Fund V, which held a final close in 2018. That sale set a record low yield for Warsaw offices and delivered an IRR in excess of 60%.
Residential sales in the UK and Denmark of over €200 million also contributed meaningfully to the transaction total and included the sale of residential land, individual units and entire residential apartment blocks to the growing number of multi-family institutional investors in Europe.
The office and residential sectors constituted the largest components of Europa Capital’s strong acquisition activity, which saw the substantial deployment of Fund V and where its investment strategy is focused on the drivers of urbanisation. The year also saw investment in German urban logistics in 2018.
Key 2018 deals included:
• Office: Disposal of the 14,500 sq. metre Plac Malachowskiego office building in Warsaw, Poland;
• Residential: Disposal of 268 residential units comprising three buildings in Copenhagen, Denmark;
• Urban Logistics: Acquisition of an 183,000 sq. metre urban logistics portfolio located across six cities in Germany and Austria for €92.5 million; and
• Mixed-use: Acquisition of the 12,800 sq. metre former Clerys department store for office and retail conversion in central Dublin, Ireland.
Jason Oram, Partner at Europa Capital said:
“It has been good to kick start the new year off the back of a strong sales programme in 2018, where our asset management strategies in Europe have meant we have completed disposals ahead of business plan, delivering strong returns.”
“Europa Capital’s value-add funds focus on acquiring and improving assets which benefit from strong occupier demand driven by job creation and household formation arising from European urbanisation, which is a dynamic structural change in the market. The purchases we have undertaken on behalf of Fund V play to these trends, which we believe offer compelling opportunities to create strong assets and deliver future value.”
“Looking forward, we expect that current economic and political volatility which is unfolding across Europe will provide more cyclical opportunities for real estate investment that will also meet our clients’ real estate investment objectives.”