DREAM GLOBAL REIT (TSX:DRG.UN, FRA:DRG) (or “Dream Global”, the “Trust” or “we”) today announced that it has entered into a binding agreement to sell the Trust’s property located in Offenbach am Main, part of the Greater Frankfurt Area, following the Trust’s rezoning and planning initiatives with respect to the property. The sale price of €35.5 million represents an unlevered IRR of over 20% over the Trust’s 8.5-year hold.
The transaction is expected to close in the third quarter of 2019 subject to customary closing conditions. The sale of the property is consistent with the Trust’s strategy to add value to its Redevelopment properties through rezoning and intensification, and dispose of assets where the highest and best use is largely residential. Dream Global intends to reinvest the net proceeds from this sale in acquisitions of high quality properties in its target markets. The property was vacated by Deutsche Post in July 2018; as such, the Trust expects that the sale of the property will have a positive impact on its NOI and FFO once the net proceeds are reinvested.
The 11,900 m2 site is currently improved with a 10,600 m2 mixed-use office building formerly leased to Deutsche Post. Working with the local planning authorities, the Trust has developed a concept providing for over 25,000 m2 of mixed-use residential development. The selling price represents a value of €1,375 per m2 of gross leasable area.
“This transaction underscores our approach to generating value for our unitholders and is consistent with our strategy to deliver organic growth through smart asset management while leveraging the expertise in our platform,” said Michael Schwoebel, Head of Real Estate, Germany. “This property also highlights the value creation possibilities in our Redevelopment portfolio, an extensive income-producing land bank comprising properties with upside potential from redevelopment, intensification, and conversion to alternative uses.”
Dream Global REIT is an owner and operator of a diversified high-quality portfolio of office and industrial properties located in key markets in Western Europe with a focus on Germany and the Netherlands. Our in-house platform comprises over 140 local leasing, property management, asset management and development professionals operating out of 13 offices in Europe and North America. For more information, please visit www.dreamglobalreit.com.