REAL ESTATE – Germany’s Deutsche Immobilien Fonds AG (DIFA) has acquired 50% of a 250,000 square foot central London office complex for around £90m (€130m).

The deal for “building 3” will kick off phase two of the 11-acre Paddington Central project owned by Morley Fund Management. This phase of the project, which Morley acquired from insurer Equitable Life in 2004, is scheduled for completion by the end of 2007.

DIFA, which has a global real estate portfolio of €13.7bn, has long targeted prime UK office real estate, especially in London’s West End. A spokesman for the fund said DIFA would target a yield on the speculative Paddington project of between 6-6.5%.

He said the fund was looking at offices and hotels in central London but that it “would also consider retail, probably in the south of England”. DIFA currently holds retail assets only in Germany.

The first phase of Paddington Central is fully let to tenants, including financial services firm Prudential and retailer Kingfisher.