CLS announced that it has acquired PURO, a multi-let office building in Munich, for €32.0 million excluding costs.
The purchase price reflects a net initial yield of 5.1%; the reversionary yield is estimated to be 6.4%.
The property comprises 140,717 sq ft (13,073 sqm) of office space over three floors and is let to nine tenants, providing a WAULT of 4.9 years. The contracted annual rent of €1.73 million equates to an average of €11.00 per sqm per month, and with an ERV of €13.50 per sqm per month, presents significant opportunities for rental growth.
In 2018, average rents in Munich were reported by Colliers to have increased by around 10% and, with vacancy rates in Munich below 2%, the company expects rental growth to continue.
The Company expects to spend €3.0 million to improve the building, including converting lower ground storage into further offices. Located within the established office area of Ismaning, between the city centre and the airport, the property benefits from excellent transport links and proximity to a variety of amenities for tenants.
The building is leased to IT, telecommunications, manufacturing and healthcare companies. CLS intends to finance the acquisition through cash resources and local bank debt.
Fredrik Widlund, Chief Executive Officer of CLS, commented: “We are delighted to acquire PURO in Ismaning, an area of Munich in which we have been looking to invest for some time. We remain committed to building an increasingly geographically diverse portfolio and this acquisition will further strengthen our presence in Germany. PURO will allow us to use our local expertise and active management capabilities to drive rents over the long term.