The REIT recently entered into a conditional agreement to purchase an office property in Duisburg on a joint venture basis for $67.5 million. The eight-storey, 217,000-square-foot office building, developed in 2008, is fully leased to Mitsubishi Hitachi Power Systems Europe GMBh until Dec. 31, 2020.
The REIT is acquiring the property in a 50-50 co-ownership agreement with a strategic, global institutional investor with a long-standing relationship with Inovalis. The property purchase, from a fund managed by a global European insurance company, has an expected May closing.
The REIT’s share of the purchase is approximately $33.7 million and will be funded through a combination of cash-on-hand, proceeds from re-financing and up-financing of the REIT’s French properties, and a first mortgage of $18.4 million (Inovalis’ share).
Consistent with growth strategy
Khalil Hankach, Inovalis’ chief investment officer, said in a statement the acquisition is consistent with the REIT’s growth strategy of pursuing high-quality assets in good locations and stable markets at attractive relative valuations.
Hankach said Inovalis sees similar investment opportunities in other targeted European markets.
Inovalis REIT is a relatively new player in the game, having completed its initial public offering in April. The Ontario-based REIT currently has three office properties in France and one in Germany, totalling approximately 529,267 sq. ft.
Inovalis’ seven-storey office building in Hanover, with 124,076 sq. ft., is currently 100 per cent leased. In France, the REIT owns buildings in Paris, Vanves and Courbevoie. The buildings are strategically located in major city and town centres, generally in close proximity to public transit as well as to major shopping areas.
“Given their central and strategic locations, we believe that these properties will continue to be attractive to office, commercial, industrial and retail tenants,” Inovalis says on its website.
Inovalis said it will also go after assets in other European countries when they meet the REIT’s investment criteria.
Expanding Canadian trend
Inovalis’ acquisition of German properties is following a popular trend by Canadian companies.
In mid-February, Unibail-Rodamco SE entered into a partnership agreement with the Canada Pension Plan Investment Board to acquire CentrO. Oberhausen-based CentrO is one of the country’s largest shopping centres, featuring 232,000 square metres of retail and leisure attractions, including two adventure theme parks.
The transaction is expected to cost 535 million euros.
The Canadian pioneer in Deutschland is Dundee International REIT, (DI.UN-T) whose German portfolio consists of approximately 15.7 million sq. ft. of office, industrial and mixed-use properties.
According to its website, Dundee likes Germany because it’s “Europe’s largest economy with solid fundamentals, including a highly skilled workforce, significant investments in infrastructure and low unemployment.”
In early December, Dundee added to its significant German portfolio, purchasing an office property in Dusseldorf for approximately $107.7 million.