Korea’s Mirae Asset exits Cologne property with 8% annual return

Listed German property investor DIC Asset AG bought the Cologne City Hall office complex near the city’s Bahnhof Deutz train station from Korean investment manager Mirae Asset Global Investments for €500m just before Christmas. Frankfurt-based DIC Asset said it had bought the property in a club deal on behalf of five German institutional investors.

Mirae Asset acquired the Stadthaus (as it is known locally) in April 2016 for €365 million from now-disgraced German real estate fund manager Joseph Esch, who developed the building in a joint venture with Sal Oppenheim before the private bank was taken over by Deutsche Bank in 2010. 

Mirae says it has achieved a 27% capital gain after holding the property for just over three and a half years, with Korean local media reporting that the asset had provided a stable annual return of 8%.

The complex, which was completed in 1998, consists a pair of office buildings with a net leasable area of 103,593 sqm and 2,900 parking spaces. The Peter Böhm-designed office complex houses 3,500 civil servants, and is fully leased to the city government with an average remaining lease term of nine years.

The Stadthaus is adjacent to the Lanxess Arena, which Mirae Asset Global Investment acquired in a joint venture with Hong Kong-based Junson Capital for €440 million in 2015.

The long-term lease on the Stadthaus is thought to be at an above-market rate, having been negotiated by Esch with a government administrator who later became a managing director of the fund manager’s holding company Oppenheim-Esch-Holding Gbr.

According to Sonja Wärntges, DIC Asset AG’s chief executive officer, the Stadthaus is a “highly attractive landmark property occupied by a triple-A tenant and distinguished by stable long-term cash flows and distributions.”

Just over five months ago Mirae also sold the Taunusanlage 8 building in Frankfurt’s business district to the Wirtgen family office. That flip for €400m after holding the asset for only two years brought Mirae a healthy profit of €120m, after it boosted the building’s occupancy from 60% to practically full.

Separately, in another deal involving Korean buyers, Savills Investment Management bought two German logistics properties in Dortmund for €140m on behalf of a consortium of South Korean institutional investors. Savills said the 90,000 sqm portfolio was bought from the Dubai-based Gulf Islamic Investments and Rasmala Investment Bank. The two single-level buildings are leased long-term to ecommerce giant Amazon.

Savills has now invested over €1bn since August 2018 on behalf of South Korean investors, while the Savills IM strategic partnerships team now manage more than €4.5bn on behalf of Asian investors.

According to Savills’ Jon Crossfield, “With prime logistics yields continuing to fall to new record lows across all of Europe, careful stock selection is becoming even more critical… To acquire two new single level units let on long leases to Amazon in the Rhine-Ruhr is rare, and in our view, reflect some of the best logistics real estate in Europe. We are delighted to have been involved and the assets are a great addition to Savills IM’s growing assets under management of prime logistics of over €4bn.”