Listed Godewind buys Frankfurt landmark tower for €85m

Listed German office investor Godewind Immobilien has bought the City Gate office tower in Frankfurt for €85m from an entity asset-managed by HRO Germany. The price corresponds to €3,647 per sqm.

The 28-storey building in Frankfurt’s Nordend district, previously known for years to Frankfurters as the “Shell Hochhaus”, comprising 23,308 sqm of rental space, was modernized in 1993 and again in 2018. The multi-tenant complex is around 87% leased, according to the vendor's agents, CBRE Germany. Land Hessen is the main occupier, with an average 6.7 years remaining on the lease, along with a number of other public sector companies.

Godewind said that the asset had 'significant appreciation potential', with a potential rent for full occupancy of around €4.3m per year. The current rent is €3.8m, representing a gross initial yield of around 4.5%. The transaction is expected to complete in the third quarter of the year.

Earlier in the month Godewind bought the Quartier am Zeughaus office property in Hamburg’s Eppendorf district for €153m, using a €92m loan to finance the deal. It said its financing costs were 1.20% for a five-year term, bring its overall average borrowing costs on the portfolio to 1.38%. Its long term net LTV is 45-55%, said the company.

Having listed on the stock market last year as a blind pool, the company embarked on a flurry of deals, including the ComConCenter in Frankfurt, the Airport Business Center in Düsseldorf, Sunsquare near Munich and the Frankfurt Airport Center (€168m). This year it closed on deals for the Pentahof in Hamburg, the Eight Dornach property near Munich, the Y2 building in Frankfurt and the Herzogterrassen asset in Düsseldorf, on which it has just completed €80m of financing.

The overall vacancy rate in the company’s portfolio is about 28%, or 75,500 sqm, giving the portfolio decent upward potential, said Godewind.