“Straco, together with the young real estate company Downtown, is acquiring a large portfolio from the listed office specialist Befimmo”
“The new owners are paying €104 million for 25 run-down provincial properties with major redevelopment potential”
Befimmo’s major clean-up continues.
Befimmo has signed an agreement for the sale of 25 buildings, the listed office property specialist announced in a press release on Monday. The transaction is worth €104 million with a total surface area of 115,000 square metres.
Downtown Real Estate was founded in 2017 by Alexander Steyns and Jan De Kuyper, who learned the trade at the Antwerp real estate group of Eric De Vocht (IRET). The Antwerp developer Serge Hannecart (LIFE) and Limburg-based construction entrepreneur Mathi Gijbels each own a 25% stake in DWNTWN. The company focuses on the redevelopment of large urban projects. At present, Downtown is renovating the former IBM Tower behind Brussels North Station, together with Filip Balcaens’ investment holding Baltisse.
The 25 properties come from Befimmo’s former Fedimmo portfolio. In 2006, Befimmo acquired 62 office buildings from the Belgian federal government for more than half a billion euros. That portfolio included the WTC 3 tower in the Brussels North district and a series of office buildings at prime locations around Rue de la Loi / Wetstraat. Fedimmo also owned a large number of government buildings in more decentralized locations in smaller cities.
“They are buildings in attractive central locations with significant redevelopment potential. But they are not our cup of tea.”
— Jean-Philip Vroninks, CEO of Befimmo
The sold properties are spread across Flanders and Wallonia. They mainly consist of small office buildings in provincial towns such as Tongeren, Oudenaarde and Sint-Niklaas. All the properties are leased to the federal government, usually to the tax authorities or the courts, although some are vacant. Because they are mostly bleak office buildings in small towns, the portfolio is known in real estate circles as ‘Befimmo’s junk.’
Befimmo CEO Jean-Philip Vroninks considers that label unfair.
“They are buildings in attractive central locations with significant redevelopment potential. But many of them are small projects in provincial towns. That is not our cup of tea.”
According to its new strategy, Befimmo wants to focus on large, sustainable redevelopments in major city centres — for now mainly in Brussels. The company is currently transforming the WTC 1 and 2 towers into the multifunctional megacomplex ZIN, with 110,000 square metres of offices, homes, a hotel and retail space.
BEFIMMO
Befimmo sells 25 properties in one go for €104 million
Befimmo had long wanted to sell its buildings in smaller cities. Last year, six former Fedimmo properties were already sold, including sites in Deinze, Bilzen and Diksmuide. Meanwhile, Befimmo is undergoing a major transformation. The Belgian office specialist will disappear from the Brussels stock exchange early next year following the successful takeover bid launched at the end of February by the Canadian real estate investor Brookfield.
The €104 million portfolio represents only a small part of Befimmo’s total property portfolio, which was valued at €2.9 billion at the end of June. While the portfolio may have been a burden for Befimmo, for the new owners the 25 buildings could be worth their weight in gold. Almost all former Fedimmo properties are located in the centres of smaller cities, often close to the railway station. The sites offer strong redevelopment potential, for example into housing, care facilities or modern offices.
One advantage for the new owners is that the properties are still leased to the federal government for an average of 2.5 to 3 years. During the redevelopment phase, Straco and Downtown will continue to receive (automatically indexed) rental income for several years. According to Befimmo CEO Jean-Philip Vroninks, this additional cash flow generated strong interest in the portfolio. Despite the current caution among real estate investors, Befimmo received more than ten bids.
Remarkably, Befimmo is not selling all decentralised Fedimmo properties. The excellently located Sciensano headquarters, next to the AfricaMuseum in Tervuren, will not be sold. Nor will an outdated building at the Zegemeer in the sought-after seaside resort of Knokke-Heist, where a boarding school was recently auctioned for €24 million. Clearly, the term “junk” does not apply to all former Fedimmo properties.
Source: De Tijd
Lukas Vanacker
1 November 2022, 16:22
