ADO Properties, controlled by Shikun & Binui Holdings Ltd. (TASE: SKBN) of the Arison Group, is buying 885 residential units in Berlin and 116 commercial units in central neighborhoods of the city for €137 million (NIS 590 million).
Of the properties being bought, four buildings (35 housing units) are in the planning stages for conversion to condominiums for sale as individual homes. Most of the properties are in central Berlin, and some are in the north of the city.
ADO's asset portfolio will thus grow to some 15,500 apartments in Berlin. The company reports that its annual rents on these properties amount to some €6.4 million. The average rent per square meter is about €6.5.
The deal will be financed partly from the proceeds of a share offering by the company in July 2015, in which it raised €415 million, and from bank finance. The ADO Group currently has more than NIS 1 billion cash.
The company estimates that it will be possible gradually to raise the rent on the above properties to an average of €7.2-8.8 per square meter, depending on location. The occupancy rate of the properties being purchased is about 95%, and the company estimates that it will be possible to raise this in the short term. The company also plans to enhance the value of the properties with a program of renovations, which will also enable it to raise rents substantially.
ADO Group CEO Shlomo Zohar said, "The profile of the acquired assets matches the profile of company's assets and the group strategy of concentrating on areas of Berlin with potential for future enhancement. The population of Berlin continues to grow rapidly, and this suits our strategy of buying income-producing properties in central Berlin, taking the view that demand in the city, stemming from accelerated economic development, will continue to enhance the value of the group's asset portfolio."
Published by Globes [online], Israel business news - www.globes-online.com - on October 6, 2015
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