CapitaLand acquires its first office building in Germany for €245m

A joint venture between CapitaLand and Lum Chang Holdings has acquired an office building known as Main Airport Center in Frankfurt for €245 million ($292 million) in cash.

The acquisition marks CapitaLand’s first office building in Germany.

CapitaLand holds a 94.9 percent stake in the joint venture while Lum Chang Holdings Limited, an unrelated third party, holds the remaining 5.1 percent stake.

The freehold office building is currently 84 percent occupied by more than 30 quality tenants. Tenants include Dell and Mastercard, which have set up their German headquarters there.  Lufthansa has also headquartered its customer loyalty operations in the building.  MAC is expected to attain an occupancy rate of more than 95 percent by June 2018 based on the leases already secured for next year.

Demand for commercial real estate is expected to rise given Germany’s positive economic outlook, according to Colliers International. Frankfurt’s office market is on an upswing as many major multinational companies and Japanese banks are planning to open new offices in Frankfurt.  The city’s office leasing market remained strong during the third quarter 2017 with a 24 percent year-on-year increase in take-up of leases.  Transaction volume for offices also grew by around 13 percent year-on-year.

Frankfurt is the top investment destination in Germany, according to fDi Intelligence. It is at the core of the dynamic Rhine-Main Metropolitan region that boasts 365,000 companies with close to 2.9 million employees generating an annual gross domestic product of more than €200 billion ($239 billion).

In September 2017, CapitaLand Commercial Trust acquired Asia Square Tower 2 in Singapore for S$2.09 billion ($1.54 billion).  And CapitaLand, CapitaLand Commercial Trust and Mitsubishi Estate Co. formed a joint venture in July 2017 to redevelop Golden Shoe Car Park into a 919-foot tall, 51-story landmark integrated development in the heart of Singapore’s Central Business District.  The total development is estimated to cost S$1.82 billion ($1.36 billion) and is expected to be completed in 2021.

CapitaLand’s serviced residence unit Ascott has been operating in Germany for 15 years and its real estate investment trust, Ascott Residence Trust, owns five properties with over 700 units across Berlin, Frankfurt, Hamburg and Munich in Germany.  This includes the 165-unit Citadines City Centre Frankfurt, a 20-minute drive from the MAC.