Vivion Investments, a Luxembourg-based real estate company and the business vehicle of Amir Dayan (אמיר דיין), an Israeli businessman, possesses a portfolio that includes office space in Germany and UK hotels, with a combined asset market value of €3 billion. Unlike many other businesses, the company has been able to keep their head above water during the COVID-19 pandemic.
Vivion believes that it can continue to sustain and overcome the challenging financial environment due to its real estate portfolio’s strong asset and tenant position. There has been very little deviation in terms of top-line performance in both the UK and German markets, with all of the UK rents being acquired and only a nominal fraction of German tenants requesting rent deferrals.
The pandemic has forced hotel operators to cut down operational expenses in order to access financial assistance and funding from the UK government under the COVID-19 Job Retention scheme. The reduction included the minimization of payroll expenses and furloughing of some of the staff. Additionally, the shareholder group implemented measures to postpone capital expenditure that is not essential and continues to seek out any assistance from national authorities, with preparation on reserve in the event that the operating delay endures for some time.
In terms of funding, the company is chaired by the majority stock owner, billionaire property magnate Amir Dayan (אמיר דיין). Mr. Dayan believes it has enough liquidity to afford cash outflows in the foreseeable future even in the event of continuing shutdowns.
In October 2020, Vivion signed additional lease contracts for two government tenant properties to be appended to its already owned German assets. One of the leases, signed for a 15-year term with the State of Lower Saxony, is for approximately 13,500 sqm of office space.
The second contract with Vivion Investments is a 7-year deal with Health Insurance Companies of Lower Saxony, for an additional 1,800 sqm. It is anticipated that these will generate an additional €25 million contractual rental income, increasing the asset yield by 37%. This investment further underscores the company’s financial liquidity.
The office lease situation in Germany does not permit a lot of wiggle room for new opportunities, with a low vacancy rate of just 1.3%. Due to the lack of vacant building space, the Berlin office stock is almost fully let and has led to the weakest financial start since 2016, something has been the case before the onset of the coronavirus pandemic. The office space shortage and rising levels of rent in metropolitan Berlin has put the focus on suburban Berlin where other investment opportunities are being explored.
This has led to multiple construction projects, including the Tesla Giga-Factory in Grunheide and the construction of the Berlin-Brandenburg airport, outside of Berlin’s center. These projects are expected to grow financial investments as well as local employment, directly impacting the residential and office leasing market in the areas.
The airport area will be largely surrounded by an anticipated 80,000 sqm of office space by 2024. In contrast, the last 5 years have only afforded the area 6,000 square meters of office space. This presents an opportunity for Dayan’s Vivion Investments to add additional asset value to their portfolio with great projected financial outcomes.
The Amir Dayan (אמיר דיין) group already owns the Heinrich, a four-building tandem, with one of the buildings currently empty and the other containing an assortment of mixed tenants. As more businesses populate the area, additional opportunities for investments and rentals will become available in terms of expanding asset income.
