As part of a new strategy to expand beyond Asia, Singapore-based property group CapitaLand and its listed vehicle have acquired a €356m office tower in Germany from fund manager Triuva.
CapitaLand and CapitaLand Commercial Trust (CCT) have bought the 38-storey office tower known as Gallileo in Frankfurt. The 34,000 sqm of office space is solely let to Commerzbank while the building also offers retail and gastronomy options.
CCT will hold a 94.9% stake and CapitaLand will hold the remaining 5.1% stake in the property through a special purpose vehicle.
Kevin Chee, the CEO of the manager of CCT, said: “Expanding overseas is a strategic move to deliver long-term sustainable distribution growth to our unitholders and inject diversity to the portfolio.
CCT will remain predominantly Singapore focused and will look to allocate between 10% to 20% of its deposited property overseas, Chee said.
“We have been actively exploring opportunities to acquire core commercial assets in key gateway cities in developed markets. Germany is a key focus for CCT given the depth of good quality investment grade commercial assets.
“Frankfurt’s office market is particularly attractive in view of the strong momentum in office demand and resilient rents,” he said.
Gerald Yong, the deputy CIO of CapitaLand and head of CapitaLand International, said: “This is CapitaLand’s second office acquisition in Germany in less than six months following our acquisition of the Main Airport Center in Frankfurt last December.”
Yong said the acquisition of Gallileo is in line with CapitaLand’s strategy of growing its platforms and increasing its holdings of well-located assets in developed markets outside of Asia.
“In deepening our presence in one of the world’s largest and most stable economies, we will continue to deploy capital to achieve higher risk-adjusted returns.
“When the acquisition is completed, CapitaLand’s network in Europe will comprise 46 serviced residences and hotels, as well as two commercial properties with over 1m sqft of net lettable area.”
The funding of CCT’s total acquisition cost of €342.7m will be via a fully-underwritten private placement of S$208.8m of net proceeds and bank borrowings of €212.2m.
Manuel DeVigili, head of investment management at Triuva, said: “As investment and asset manager, Triuva was able to acquire this core investment on behalf of South Korean investors at an early stage in the market cycle.
“The sale is in line with the planned hold period and the investment as a whole has delivered outstanding performance for our clients.”