BERLIN-In a transaction valued at 400 million euros (approximately $544 million), legislators have approved the sale of the state-owned GSG commercial real estate portfolio to a partnership of Europe-based Orco Property Group and a Morgan Stanley investment fund. The amalgamation of some eight million sf represents the largest amount available in the German capital, say the buyers, so dominant it will need to pass antitrust review. Should it maintain such clearance, Orco officials acknowledge the deal will put the company in the top tier for Berlin landlords.

“Through this acquisition, Orco emphasizes its long-term commitment to the German capital,” Orco Germany CEO Rainer Bormann says in a release hailing parliament’s vote yesterday. “Additionally, it is our view that the involvement of Morgan Stanley is a further indication of the attractiveness and future sustainability of the Berlin location.” The new owners plan to work pro-actively on lease-up and development opportunities that could yield another 500 million euros worth of new space in “A-1 locations,” Bormann says.

GSG properties are mainly in the inner city and close to public transportation. The package is said to be in generally good shape physically and includes a diverse mix of office, flex, industrial and retail space. Among the better-known assets is the Fehrbelliner, a residential project featuring townhouses and penthouses, while another is Haus Cumberland on the Kurfurstendamm, which Orco says could potentially become “the new destination for the western part of Berlin.” The site of the former Werthein-Areal on the Leipziger Platz in downtown is seen as a key connecting development between the east and west centers of Berlin, with potential for one million sf of build-out.

The new owners will seek to attract life sciences companies and academic institutions to the portfolio’s office and research properties, says Bormann, who announced a commitment by Technische Universitat Berlin to a long-term lease for research and other space that will extend to 2044. The property is known as Technologie- und Innovationspark Berlin, or TIB. “The joint venture has emphasized that it is highly interested in the [university] remaining in the TIB,” Bormann says, “and in the near future, further cooperation projects and initiatives are planned.”

Orco Germany is a property company listed on the Frankfurt Stock Exchange’s Open Market and has operated in Germany since 2004. Its parent company, Orco Property Group, is a leading investor, developer and asset manager in central Europe where it has 1.3 billion euros worth of property under its control. The GSG deal is being done in partnership with the Morgan Stanley Real Estate Fund V.

GSG stands for Gewerbesiedlungs-Gesellschaft mbH, which was founded in 1965 by the Berlin Senate, the Berlin Chamber of Commerce and the Trades Corp. The bill passed yesterday had been introduced in the Senate last month and essentially paves the way for GSG parent company Investitionsbank Berlin to accept the offer from Orco and Morgan Stanley. A closing date was not provided.

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