Axel Springer closes sale for €755m to Blackstone and Norway Fund

Another giant Berlin commercial property sale also took place this month, having been flagged (including in REFIRE's pages) about half a year ago as likely to be one of the biggest sales of the year. German publisher Axel Springer has sold its future headquarters in Berlin, currently under construction, to Norway’s sovereign wealth fund, while selling its existing home to private equtiy group Blackstone.

Norges Bank Real Estate Management, which manages property investments for the NOK8.1trn (€865bn) oil fund, said it bought the project for €425m.

Axel Springer sold the 100% interest in the 13-storey, 52,000 sqm Axel Springer Neubau office building in Berlin Mitte, which is to be completed in December 2019, and concluded a sale and leaseback deal with the new owners. According to Dr. Julian Deutz, Axel Springer's CFO, said in a prepared statement, "We are delighted about the high level of interest in our Berlin real estate and that we were able to conclude this transaction so rapidly. The realized purchase price significantly exceeds our initial expectations.”

He added, "The new Axel Springer building is key to our goal of deepening the cultural transformation of the company…Whether we own the building or rent it is irrelevant in that regard.”

Meanwhile, Blackstone and the Frankfurt-based Quincap Investment Partners have agreed to buy Axel Springer Passage, a 53,000 sqm, 10-storey office complex in Berlin Kreuzberg (and across the street from the Neubau building sold to the Norwegians) that is currently home to the publisher.

Axel Springer will move from the old headquarters to the new building in 2020. Once finished, the new headquarters will have 52,200 sqm of space. Its current home was developed in 2004 and is divided into 46,000 sqm of office space and 7,000 sqm of retail. OfficeFirst, Blackstone’s German office portfolio company, will manage the building.

Anthony Myers, head of real estate Europe at Blackstone, said the firm was delighted to make another investment in Berlin. “Axel Springer Passage will form an integral part of our German office portfolio which focuses on high-quality assets in prime locations across Germany’s gateway cities,” he said.

Demand for office space in Berlin is outstripping that of Germany's other large cities, but all are seeing a boom and a shortage of quality office accomodation. The overally transaction volume in German commercial property from January to May 2017 was more than €19.4bn, with Office seeing the highest volume, totaling more than €7.7bn, followed by the Retail sector, totaling more than €4.965bn.

The Berlin market was the number one market by transaction volume, totaling more than €2 billion of acquisitions, followed by Munich, at more than €1.7 billion.