Tristan Capital Buys Big in Germany

BERLIN—Tristan Capital Partners has acquired a neighborhood shopping center in Berlin and a mixed-use building in central Munich among five German investments totaling more than $510 million (€450M). The five properties will be acquired in Q1 for funds managed by the European firm.

“Germany's economic resilience has been a key theme in Europe for Tristan funds as has been the focus on neighborhood shopping centres that have a dominant position in local city catchment areas,” said Ali Otmar, managing director of investments at Tristan. “Tristan funds have started 2015 with a bang with these two acquisitions and the three others that are pending, demonstrating that even in an in-demand market like Germany there is ample opportunity to unearth assets with structural flaws that can be repositioned through active management.”

Curzon Capital Partners III, a core plus-style fund, has acquired the 37,900 square meter Neukölln Arcaden shopping center located on the main thoroughfare of the fashionable Berlin district of Neukölln for $75 million (€65.6M) million from AXA Immosolutions, a German open-ended fund that is in liquidation. Neukölln Arcaden has 46 shop units, a nine-screen cinema, a public library, post office and parking on its upper floors.

PAMERA Cornerstone REA is advising on overall asset management of the center and will take a co-investment stake in the transaction.

CCP III has also purchased a 9,300 m2 mixed-use building adjacent to the Karstadt department store in Munich for about $73 million (€62.2M) from Credit Suisse's CS Euroreal open-ended real estate fund, which is also in liquidation. It plans to convert the upper floor office space into a 175-room hotel in a joint venture with the Freo Group, a private equity firm specialized in real estate investments and related services in Central and Western Europe. Freo has pre-let the planned hotel on a 25-year lease to the “25hours Hotel” operator and will continue to act as asset manager and co-investor.

Separately, Tristan Capital-advised sister fund European Property Investors Special Opportunities 3 (EPISO 3) has agreed transactions pending completion worth a total of about $375 million (€327M), including one of the largest retail properties in central Munich, a portfolio of mixed-use properties located mainly in Berlin and Frankfurt and a logistics park in Bielefeld, North Rhine-Westphalia.

January's acquisitions build on an active 2014 for Tristan Capital-advised funds, in which the firm invested $1.26 billion (€1.1B). Opportunity fund EPISO 3, which carried out its final close for equity raising in January 2014 with $1.09 billion (€950M) of total commitments, accounted for more than four-fifths of last year's acquisitions.

“The pace at which we have deployed capital for EPISO 3 reflects the scale of the investment opportunity that we identified when we launched this fund offering in late 2012/early 2013,” said Ric Lewis, CEO of Tristan Capital. “We don't see this changing any time soon, giving us confidence that the fund will be fully invested much sooner than we anticipated and making us plan for the offering of a successor fund in the first quarter of this year.”