LONDON (ShareCast) - (Sharecast News) - CLS Holdings has exchanged contracts to acquire PURO - a multi-let office building in Munich - for €32m excluding costs, it announced on Monday.
The FTSE 250 company said the purchase price reflected a net initial yield of 5.1%, with the reversionary yield estimated to be 6.4%.

It said the property comprised 140,717 square feet of office space over three floors, and was let to nine tenants, providing a weighted average unexpired lease term of 4.9 years.

The contracted annual rent of €1.73m equated to an average of €11.00 per square metre per month, and with an estimated recovery value of €13.50 per square metre per month, presented "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%, CLS said it expected rental growth to continue.

The firm said it anticipated spending €3m 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 board said the property benefitted from "excellent" transport links and proximity to a variety of amenities for tenants.

The building was leased to IT, telecommunications, manufacturing and healthcare companies.

CLS said it intended to finance the acquisition through cash resources and local bank debt.

"We are delighted to acquire PURO in Ismaning, an area of Munich in which we have been looking to invest for some time," said CLS Holdings chief executive officer Fredrik Widlund.

"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."

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