- Pressemitteilung BoxID 152652
Fair Value REIT-AG reorganizes asset management
- Three retail properties and one office property sold
- Rental success reduces vacancies within the group by 50%
Fair Value REIT-AG has put its asset management on a new basis. Moreover, a total of four properties were sold as part of an adjustment of the portfolio. In addition, rental successes have cut the former vacancies within the Group by half.
In detail the services outsourced to third parties have been reduced and the contractual relationships with IC Real Estate Group have been restructured. As part of this restructuring, the former agreement for asset management and corporate services, which originally had a duration until the middle of 2011, was replaced by a new service agreement for accounting with IC Immobilien Service GmbH (ICIS), which has a fixed term through to the end of 2012. In future, Fair Value REIT-AG will take over the operating asset management, previously performed by the service provider.
Instead of the hitherto agreed remuneration, which was 20% of the amount to be disbursed prior to deduction of the remuneration within the meaning of the REIT Act, both fixed and variable remuneration components have been agreed to in the new contract. These are geared to the rent actually received by the proportionate total portfolio. Remuneration in 2010 totals 0.75% of the projected rent due to Fair Value. The total remuneration for accounting as a percentage of actual rent will hence fall when the portfolio grows in future. In addition, the property management for the direct holdings, with which ICIS has also been mandated, has been expanded at unchanged conditions and now includes additional reporting requirements for Fair Value's real estate holdings in subsidiaries and associated companies that are managed by ICIS as well. At the same time, the fixed period for this agreement has also been extended by around 18 months through to the end of 2012.
Frank Schaich, Fair Value REIT-AG's CEO, welcomes this restructuring of the contractual relationships with the IC Immobilien Group: "In addition to the strategic asset management, we have decided to take operating asset management also into our own hands. We are pleased that IC Real Estate Group was ready to make the corresponding changes despite our existing agreements." He highlights the advantages that the new regulation offers for both parties: "Fair Value REIT-AG will achieve a further reduction in general administrative costs as the portfolio grows in future. In addition, the IC Immobilien Group benefits from the improved ability to forecast their fee income."
Three retail properties and one office building sold
In view of the planned reduction of retail properties in the portfolio of existing properties, three retail buildings in Hamm, Passau and Seligenstadt and one office property in Aachen were sold to several buyers for a total price of € 8.2 million. Transfer of ownership is expected for the end of the first quarter of 2010. The sale of the office property was considered strategically appropriate due to its problematic microlocation with a resulting vacancy rate of around 50% of the property's floor space. Around 70% of the funds accruing to the subsidiaries which held the properties will be used to repay financial liabilities, and the remainder will be added to cash and cash equivalents.
Rental success halves existing vacancies within the group
The 8,220 m² of vacant space at the end of 2009 at a logistics property in Cologne owned by one of the subsidiaries was fully let with effect from May 1, 2010 to an expanding, existing tenant. This allowed 50% of the vacancies within the Group as of December 31, 2009 to be cut. At the same time, the same tenant took over the space of tenants with leases coming due later in 2010 and in 2012. As a result, all of the logistics space in the property is now rented to the one single tenant for five years.
In addition, it was possible to extend a rental agreement with comdirect bank for an office property in Quickborn held by an associated company ahead of time. The rental agreement, which was due to expire in May 2012, was prolongated by a further five year term through to May 2017. As compensation for the premature extension, the rent was reduced to the current market level from January 2010 onwards.
Fair Value's CEO Frank Schaich, is very pleased with this proof of the company's successful, proactive property and asset management: "Even before we had a very low vacancy rate of less than 5% of the proportionate potential rent. Now we have succeeded in cutting this even further. Taking into account the reduction of vacant space resulting from the sale of the office property in Aachen, the lease up in Cologne will lead to a 58% reduction in the total vacant space of our direct holdings and subsidiaries compared to the end of 2009." He views these rental successes as further improvement of the stability of rental income: "The premature extension of the rental agreement in Quickborn and the early follow-on rental in Cologne mean that we have already worked through almost 75% of the rental income due for extension in 2012."
Fair Value REIT-AG
Munich-based Fair Value REIT-AG focuses on the acquisition, leasing, property management and sale of commercial properties in Germany. Its investment activities focus primarily on offices, logistics and retail properties in German regional centers. As a REIT-AG, Fair Value is not subject to corporation or trade tax and benefits from the exit tax privilege when purchasing properties. Fair Value's USP is that - in addition to investing directly in real estate - it also acquires interests in closed-end real estate funds.
In its "Participations" segment, Fair Value currently participates in 13 closed-end real estate funds in a highly diversified portfolio of 48 properties with a total rental area of 415,829 m² and a market value of around € 480 million as of December 31, 2009 (Fair Value's share of this portfolio totaled around € 191 million on December 31, 2009).
In its "Direct Investments" segment, Fair Value owns a portfolio of 32 commercial properties in Schleswig-Holstein. These have a rental area of more than 42,948 m² and are mostly used as bank branches. These properties had a total market value of around € 46 million as of December 31, 2009.
On December 31, 2009, the proportion of the entire portfolio due to Fair Value had a market value of around € 236 million. As of December 31, 2009, this proportionate portfolio was 95.5% let in terms of the achievable annual rent of € 20.9 million. The rental agreements had a weighted remaining term of 6.3 years on December 31, 2009. Around 46% of the potential rent stems from retail facilities, 40% from offices, 8% is from logistics facilities and 6% from other facilities.
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