Deutsche Bank, ECE said to have bought Palais Quartier for €800m

Reports circulating around Frankfurt suggest that a deal may already have been struck for a change of ownership of the whole Palais Quartier complex in the centre of Frankfurt’s shopping district. A number of media reports quoted reliable sources saying that Deutsche Bank (through subsidiary Deutsche Asset & Wealth Management) and shopping centre operator ECE are paying about €800m for the complex.

If this is true, then the price would be considerably lower than that at which owner Dutch bank Rabobank had been looking to sell since the beginning of the year – for a price closer to €1bn, it is thought. The construction costs for the complex, which opened in 2009, were estimated at €1.2bn.

Rabobank’s development subsidiary MAB built the complex at Frankfurt’s Hauptwache , in the heart of Frankfurt’s shopping district. It consists of the 136-metre tall office tower Nextower, the 99-metre-tall Jumeirah Hotel, Frankfurt’s most prominent shopping centre MyZeil, and the reconstructed Thurn-und-Taxis Palace, which gives the centre its name.

While the shopping centre, the hotel and the Palace have become accepted parts of Frankfurt’s inner-city, the towering office building has remained largely empty since being built, despite its absolutely prime location. A mere three floors have been let out, leaving 27,000 sqm still vacant. Critics say this is because of the unrealistic rent expectations of its owner. The new owners will want to ‘reposition’ the property on the market, probably at a more realistic market rent, according to Colliers in Frankfurt.

If ECE takes over as joint owner, it will then be managing five of Frankfurt’s six largest shopping centres, along with the recently-opened Skyline Plaza in the city’s Europaviertel, the highly popular Main-Taunus-Zentrum on the city’s fringes, the Hessen-Center and the Isenburg-Center. The MyZeil has among the highest retail rents in Germany, at €320 per sqm per month second only to Munich’s very top rents.

Also in the package is the as-yet-unbuilt corner which housed the building of the old Frankfurter Rundschau newspaper, which the buyers are thought likely to sell on straight away to a third party developer. The plans envisage an 8-storey mixed-use office/residential property of 15,000 sqm office and 3,500 sqm residential, with retail on the lower floor.