ADO Grows German Multi-Family Portfolio

 By Gail Kalinoski, Contributing Editor

Rabin Savion, ADO Properties

ADO Properties continues expanding its multi-family portfolio in Germany with the acquisition of 43 apartment buildings in Berlin for €130 million, or about $139 million.

The purchase of the 1,300 residential units was made from an unidentified international investment fund.

“The acquisition offers further opportunities for our value-driven, long-term investment plan, based on the future demand for attractive housing at district level,” Rabin Savion, CEO of ADO Properties, said in a news release. “Our current portfolio is at an excellent starting position in order to benefit from future market opportunities in all districts of Berlin.”

The majority of the portfolio – 72 percent- is located in the upcoming districts of Neukölin, Pankow, Tempelhof/Schöneberg and Wedding. Approximately 17 percent of the buildings are in more established districts of Charlottenburg/Wilmersdorf, Köpenick, Steglitz and Tiergarten. The company said more than 60 percent of the buildings were constructed between 1900 and 1930, which was “a period of excellent construction quality and attractive architecture.” The remainder was built in the 1990s.

The company’s release stated the acquisitions were a good match for its current portfolio and contributes to ADO Properties’ long-term value enhancement strategy. It plans to develop a modernization and leasing strategy for each property.

“The transaction proves our ability and strategy to acquire smaller or larger portfolios as well as single buildings throughout Berlin,” Savion added. “This transaction enables ADO to continue to build a very balanced portfolio with property in inner city and outskirt locations with rent and value potential.”

Earlier this month, ADO Properties picked up a portfolio with 5,750 residential units for €375 million, or about $401 million, according to IP Real Estate. Those properties were in Berlin’s Spandau and Reinickendorf districts. With the two major acquisitions, ADO Properties owns and manages about 14,600 residential units in the Berlin area.

Germany’s multi-family market was strong in 2014 with approximately €12.9 billion in transactions, the second highest transaction volume since 2007 after the 2013 record of €15.8 billion, according to JLL Global Market Perspective Q1 2015 Residential Report.

“Further housing stock adjustments and mergers of housing companies are expected over the coming year as market conditions and the investor climate are set to remain favorable. As a result, 2015 transaction volumes are likely to reach similar heights to 2014,” the JLL report stated.

Funds managed by Ares Management L.P. have recently made investments in Germany, including the acquisition of 303 residential and 28 commercial units totaling 236,800 square feet of leasable space in the North Rhine-Westphalia region of Western Germany. Ares already owned about 1,700 residential units in west and northwest German cities.

The news about ADO Properties expanding its German residential holdings comes about two months after the company announced it planned to list on the German stock exchange by summer and raise €300 million to €400 million in an initial public offering, according to Reuters.