Frankfurt skyscrapers change hands for more than €1bn

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Even by Frankfurt’s standards, it was a busy week for sales. No less than three office towers changed hands within a seven-day period earlier this month in the city for more than a billion euros, along with a number of significant other office transactions. A number of other skyscraper and prestige office tower sales are said to be nearing completion.

Firstly, German fund manager CommerzReal emerged as the buyer of the spectacular Omniturm, the major mixed-use development from Tishman Speyer in the heart of Frankfurt’s central business district, for its HausInvest open-ended real estate fund. The price was put at about €700m. The deal was done as a share deal.

Then, independent asset manager Schroders closed on the Pollux office tower near to the Messe from Blackstone’s OfficeFirst property subsidiary for €220m, followed by the acquisition for €275m by GEG of the Garden Tower, again in the middle of the banking district, from a core-plus fund managed by Tristan Capital Partners.

CommerzReal’s CEO Andreas Muschter said of the Omniturm acquisition, “This is a prime piece of real estate developed by Tishman Speyer in a premium location with an outstanding design and architecture. We were convinced by its exceptional and unique features coupled with the mixture of usage types; it will enrich our fund portfolio.”

The 190 metre-high, 45-storey tower will offer over 54,100 sqm of lettable space including 44,200 sqm of office space and 147 apartments (in the oddly-shaped middle part of the tower) when completed in the third quarter of 2019. The hybrid high-rise asset will see its first tenants, Morgan Stanley, lawyers Hogan Lovells and property advisers CBRE, move in next year.

CommerzReal’s HausInvest is the second-largest open-ended fund in Germany, with a fund value of €13.6m (topped only by Deka’s Immobilien Europa with €15.3bn). The HausInvest fund also contains two other skyscrapers – the One Forty West in Frankfurt and the Donau City Tower in Vienna. Last year HausInvest was the most active buyer (€1.5bn) among the open-ended funds, along with Union Investment’s UniImmo:Europa fund.

Meanwhile, Schroder Real Estate led a joint venture including Finland’s Ilmarinen Mutual Pension Insurance Company and another institution to buy the Pollux skyscraper near the city’s fairgrounds in the business district. The seller was Blackstone’s OfficeFirst, and the deal was brokered by JLL.

The 32-storey Pollux building was originally built in 1997 and has recently undergone a comprehensive refurbishment, with around 35,000 sqm of rental floor area 95% occupied. Together with its twin tower Kastor, the buildings originally housed the headquarters of Deutsche Bahn. The current main tenants in the property are Zurich Versicherung, lawyers HauckSchuchardt, the FinTech Community with its TechQuartier, Aon and Lavazza.

The asset is said to be under-rented according to Schroders. Head of Germany Phillip Ellebracht commented, “After the CBD, the Europaviertel is one of the most important submarkets in the city, so we see potential for future re-letting in the future.”

According to Duncan Owen, global head of real estate at Schroder Real Estate, “Pollux is a high-quality building in a well-connected neighbourhood which attracts occupiers from multiple alternative uses. The investment is consistent with our strategy of acquiring assets with strong fundamentals in Winning Cities that are benefitting from structural changes. We expect strong levels of income growth in this market.”

The acquisition was financed by German lender DekaBank, who said it had arranged and fully underwritten a seven-year €92m senior investment facility.

DekaBank’s Amar Latif, responsible for DekaBank’s German origination business, commented: “The property was recently refurbished and is now almost fully let to good tenants on a reasonable Weighted Average Lease Length in an improving office location. There is the added attraction of potential upside on the current rents which together with very conservative Day One leverage and a strong sponsor makes this an attractive financing proposition for DekaBank.”

Separately, Curzon Capital Partners IV, a core-plus fund advised by Tristan Capital Partners, sold Garden Tower, a multi-tenant office high-rise and one of Frankfurt’s first skyscrapers, to GEG German Estate Group, for a price of €275m.

The 27,500 sqm office and conference centre building was originally bought by Tristan in 2015 for €175m, with Barings Real Estate working as operating partner in repositioning the property. Currently 95% let, The blue chip tenant mix includes the German headquarters of Societé Generale (31%), international insurer AIG (14%), and co-working provider Tribes (10%), and it enjoys a LEED gold certificate giving it top sustainability ratings.

GEG now owns three properties in Frankfurt’s banking district, along with the Japan Centre and the Global Tower, still under construction, with an investment volume of more than €850m.

For Tishman Speyer, it wasn’t all about selling. At the same time, for its own newly-launched first German investment platform, it bought its own high-rise property for insurance group Versicherungskammer. The asset is the landmark Bürohaus an der Alten Oper in the prime location of Neue Mainzer Strasse (previously known as the Citi-Hochhaus), a 21,000 sqm property leased to twelve tenants, and extensively renovated between 2015 and 2018.

The new Tishman Speyer Investment Management (TSIM) group will manage the fund, which will be headed by Frank Schäfer and Nils Skornicka.

Among other transactions, local observers expect the Trianon Tower, owned by NorthStar Realty Europe, to be close to a sale to a consortium of South Korean investors. Additionally, Pecan Development and Aermont Capital’s €1.3bn Perella Weinberg Real Estate Fund II are understood to be selling the 155-metre high, 45,500-sqm MarienTurm project, which is largely pre-let with US investment bank Goldman Sachs scheduled to occupy a quarter of the space.