E-BUILDING, LUXEMBOURG

E-BUILDING, LUXEMBOURG

Background

Rynda was asset manager of the E-Building from June 2012 to March 2018. Rynda’s initial client was a special servicer that was administering a defaulted loan secured against the property. Following the property’s transfer in December 2015, Rynda co-invested in a joint venture with Tristan.

Asset description

The E-Building is located in a business park in Munsbach on the eastern outskirts of Luxembourg City, around a five-minute drive from Luxembourg airport. The property was built in 2003 and provides 10,553 square metres of Grade A office accommodation. It is arranged over up to five floors and across three wings, with a further 1,073 square metres of archives, 273 underground car spaces and 20 external car spaces.

At the time of Rynda’s appointment, the property was 76% let to nine office tenants and generated approximately €2.5 million in passing rent with a WAULT to break of 3.0 years.

Business plan

We executed the following business plan:

• Rynda oversaw the replacement of the HVAC system for a cost of c. €2.8 million, as well as numerous repairs in other areas.
• An on-site gym was loss-making, did not add value to the asset and potentially represented a liability to the landlord. Rynda closed the gym and sold the gym equipment.
• Two occupants in the building did not have formal leases — Rynda formalised the leases.
• Rynda re-geared the leases of the building’s two largest tenants, representing 60% of current passing rents.
• Rynda managed to attract a new tenant, a German financial institution, representing 7% of passing rents.
• Rynda supplemented the asset’s income by renting some car spaces to occupiers of surrounding buildings.
• Since Tristan’s investment, the business plan has continued to be implemented, and following an improvement in the lettings market, occupancy has increased to 100%.
• E-Building has now been sold with realised investment returns materially exceeding underwriting.