Hines Global REIT buys first German asset

US-based Hines Global REIT made its first venture into Germany when it paid about €52m to buy the high-profile Mercedes-Benz Bank Building near the central business district in Stuttgart, the home town of the German car manufacturer.

The property was sold by the Guernsey-registered DDE 24 Ltd., a subsidiary of the financially-troubled ex-AIM-listed Develica Deutschland. Develica, which de-listed in 2011 to avoid insolvency, has been steadily disposing of assets in its portfolio to pay down its crushing debt. Hines financed the deal with a loan from local bank Landesbank Baden-Württemberg (LBBW).

It paid €266m in 2007 as part of a deal involving a trio of properties at the top of the market, financing the purchase with a €200m loan from Goldman Sachs. However, Develica then breached the loan-to-value covenant and the loan ended up in special servicing, along with several Develica loans.

The 25,000 sqm unusually-shaped property was built in 2003, comprising two separate six-story buildings in the north end of central Stuttgart. The property, 100%-let to Mercedes-Benz Leasing, was valued itself at €88m in 2007 and generates a rent of about €4m annually. The bank holds the lease until 2018.

'The Mercedes-Benz Bank Building is a high-quality asset with a strong tenancy that complements Hines Global REIT's existing portfolio. Germany's economy is one of the strongest in Europe, and by purchasing this asset, we have increased the geographic diversity of the REIT to a fifth country outside of the US,' said Charles Hazen, president and CEO of Hines Global REIT.

Hines Global REIT is a public, non-traded real estate investment trust sponsored by international group Hines, which owns interests in 26 real estate investments located in the US and internationally, including 14 of its own assets in German cities, including Düsseldorf, Frankfurt and Berlin.