‘Die Welle’ and ‘Taunusanlage 8’ sales in Frankfurt bring huge returns
It's been a big month for Frankfurt office property with the sale in June of two of the most prominent office buildings in the city – booking big profits for their owners after what is in effect a very short period of ownership.
The American group Invesco Real Estate bought the landmark “Die Welle” office complex from Norway’s sovereign wealth fund and AXA Investment Managers – Real Assets, for €620m - €200m more than what they paid for the asset in 2013. AXA and the Norwegian group are 50-50 joint owners. The sale is the biggest property deal in Frankfurt this year.
And shortly before, South Korean asset manager Mirae Asset Global Investments Co. cashed out of the Taunusanlage 8 building which it bought only two years ago – banking a healthy profit of €120m.
Die Welle, distinguished by its wave-like shape, has 80,500 sqm of lettable space and has recently been extensively redesigned and upgraded. Located right next to the Alte Oper, and is often described as an ‘urban business campus’. AXA bought the asset in 2013 along with the Neues Kranzler Eck property on Berlin’s Kürfürstendamm for a total of €784m with the Norwegian sovereign fund, and at the time it was thought that €410m was the price paid for Die Welle.
The deal is expected to be finalized in this year’s fourth quarter. For Invesco, the deal follows on from its Capital 8 acquisition of a 45,000 sqm office complex in Paris, and brings its investment volume for its European core strategy up to more than €5bn.
Die Welle has more than 50 tenants from 15 different industry sectors. The complex also houses hospitality, retail and entertainment outlets and, says Invesco, offers “significant scope for placemaking and asset management opportunities, particularly in the context of the trend towards flexible office solutions”.
Jon Pierce, senior fund management director at Invesco Real Estate, said Die Welle’s scale provides huge optionality on business plan, combining strong upside potential and very low downside risk.
“Due to its size, a 22,600sqm plot of land in the heart of Frankfurt, Die Welle brings by nature multiple benefits to our strategy principally targeting resilient, durable, net operating income growth for our investors.”
Meanwhile, leading South Korean asset manager Mirae has sold the Taunusanlage 8 building for €400m, only two years after buying it for €280m through a private equity real estate fund, in which many of South Korea’s major pension funds and institutional investors participated. Their IRR is more than 25% when including the 7%+ dividend payout over the period.
The 17-storey property was two-thirds vacant when Mirae bought it in a competitive tender against German investors. The sole tenant at the time, the lawyers Linklaters, has since been joined by WeWork and global mutual insurance company FM Global. Mirae said it had been planning on holding the property for five years, but decided to sell when it received such a favourable offer.
Some speculation surrounds the identity of the buyer, with local observers suggesting that the buyer is single family office Wirtgen Invest, representing the interests of the family around brothers Stefan and Jürgen Wirtgen. The brothers sold the family-owned Wirtgen Group, in the construction machinery sector, to the US corporation Deere & Company (John Deere) for €4.4bn in 2017.