Finnish pension investors Varma and Elo have teamed up with Qatari sovereign wealth fund QIA and US developer-investor Tishman Speyer to acquire the €500-600 mln TaunusTurm complex in Frankfurt's banking district.
The 65,400 m2 TaunusTurm dates from 2014 and comprises offices, retail and residential units. Tishman Speyer developed the 40-storey complex and was co-owner alongside German investment manager CommerzReal. The tenants are largely financial businesses, law firms and consultancies.
In late December 2016 Tishman Speyer led the joint venture with the Finnish pension funds and QIA to purchase TaunusTurm. The financial details of the transaction were not disclosed, but the complex is estimated to be valued at somewhere between €500 mln and €600 mln.
While Tishman Speyer and QIA are both veterans of European real estate investment, Varma and Elo have until recently only invested directly their home markets.
Varma owned just over €3 bn of direct real estate at end-September 2016, with a further €675 mln invested internationally through funds. Varma was a co-investor earlier this year in the €97 mln acquisition of the Heron City shopping centre in the Swedish capital Stockholm, but TaunusTurm marks the pension group's first direct real estate venture outside of the Nordics.
'Varma has been actively sourcing investment opportunities to diversify its real estate investments outside Finland,' said Ilkka Tomperi, Varma's investment director for real estate. 'TaunusTurm is one of the leading office properties in Frankfurt – a city that shows healthy growth not only driven by the banking and financial sectors but also by media and technology sectors,' Tomperi added.
Espoo-based Elo was created in 2014 by the merger of Pension Fennia and LocalTapiola Pension Company. According to the most recent financial report available, the combined pension company had just under €2 bn of direct property and €694 mln of real estate fund investments at end-June 2016. Elo has stated it is seeking to broaden its European reach to help maintain its real estate allocation, which currently stands at about 13% of its overall €20 bn investment portfolio.
