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BERLIN-After nearly two months of work to structure and gain regulatory approval, the $545-million sale of a state-owned real estate portfolio here to Orco Property Group and Morgan Stanley has been financed and is expected to close this week. Encompassing more than eight million sf and offering extensive redevelopment opportunities, the portfolio represents Orco’s largest acquisition to date, notes CEO Jean-Francois Ott, whose firm will own the assets through its subsidiary, Orco Germany, a property company traded on the Frankfort Stock Exchange’s Open Market.

The investment “allows us to control a substantial rental portfolio of great quality in Berlin,” says Ott, calling the German capital “a city that I am very bullish about.” The deal fits Orco’s strategy to increase its income-producing property business, he says, both for the parent group and the partnership of Orco Germany and the Morgan Stanley Real Estate Fund V. Having international real estate giant Morgan Stanley involved “is a sign of confidence in our German strategy that I really appreciate,” Ott adds.

Known collectively as the GSG portfolio, the assets are to be under Orco Germany’s control within the next few days, company officials said in a release. The agreement includes a $47-million cash payment from Morgan Stanley and the contribution of their acquired 50% of GSG to the share capital of Orco Germany in exchange for 14.1 million new shares. After completion, the total number of shares of Orco Germany will be 48.7 million, effectively giving Orco a 57% stake in the venture, with MSREF V holding 29% and a free float of 14%.

As detailed in a GlobeSt.com article this spring after the plan gained approval from the Berlin Senate, the diverse portfolio includes a mix of flex, industrial, office and retail properties, plus landmark residential offerings such as the Fehrbelliner. Orco Germany is already working with life sciences companies to bolster Berlin’s role in that emerging sector. Redevelopment opportunities from the properties yield upwards of $670 million over time, estimates Ott, who says the transaction “reinforces Orco’s position in Germany and particularly on the Germany market as a top player.”

Orco Property Group is a developer, investor and asset manager of a portfolio in Central Europe valued at $1.7 billion. Listed on the Euronext and Prague stock exchanges, Luxembourg-based Orco is active in the Croatia, the Czech Republic, Germany, Hungary, Poland, Russia and Slovakia.

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