Deka acquires landmark Tower 185 in Frankfurt

German fund manager Deka Immobilien has acquired the landmark Tower 185 office skyscraper in Frankfurt for around €775m, in one of the single biggest deals of the year.

Ownership of the property will be shared by the open-ended real estate funds Deka-ImmobilienEuropa, WestInvest InterSelect and Deka-ImmobilienGlobal, as well as the WestInvest ImmoValue fund, an investment vehicle focused upon institutional investors. The property was sold by CA Immo Deutschland, WPI Fonds SCS-Fis, Fagas Asset and an additional unnamed pension fund company.

‘The acquisition of Tower 185 is one of the largest transactions carried out in Germany in 2017,’ said Victor Stoltenburg, head of acquisitions and sales Germany at Deka Immobilien. ‘This purchase allows us to acquire a high quality and exceptionally well-specified property within one of the most desirable real estate markets in Europe.’

The tower, which was completed in 2001, offers more than 100,000 sqm of leasable space and 552 parking spaces. It is the fourth tallest office building in Germany and is centrally located on Friedrich-Ebert-Anlage. It is leased to more than 20 tenants with international interests under long-term leases, with PricewaterhouseCoopers occupying more than 60% of the space.

The building has LEED Gold certification as well as DGNB Gold certification for sustainable construction.

‘At 100,000 sqm, I think it’s the biggest office tower in Germany,’ Marcus Lütgering, head of office investment Germany at JLL and who advised CA Immo on the sale, told REFIRE. ‘Most office towers are between 50,000 sqm and 70,000 sqm, which can make the size a challenge for investors. In the last round, interest was very international, including interest from Asian investors,’ he added.

However, at the end, Deka may well have entered into an exclusivity arrangement, according to one analyst, who asked not to be identified. ‘Deka doesn’t usually like to enter a bidding war,’ he said. ‘It wouldn’t surprise me if they had Tower 185 under exclusivity in the last stage.’ Deka could not be reached for comment.

There are also other things to consider, according to Boris Schran, a founding partner at German private equity group, Peakside Capital Advisors: ‘The real question is: what’s the right ERV for that building? If it’s around €7,000 per sqm, that’s a pretty high price for Frankfurt. However, the Frankfurt office market is developing quite well. If you discount locations like Eschborn, vacancy rates are only around 6.5% and demand for offices is still very high.’