International real estate firm Hines has taken a considerable step towards filling its European Value Fund (HEVF) by purchasing Allianz Life Insurance's Stuttgart headquarters for more than €300 mln.
The Karlshoehe Portfolio is a complex of two office towers and 11 other buildings with a total lettable area of more than 90,000 m2. The portfolio is 98% leased, largely to Allianz.
The campus is located between the CBD and an urban neighbourhood close to the Stadtmitte train station and has served as the insurer's headquarters since 1927. Hines plans to evaluate each component element of the portfolio, including refurbishments and relettings, in order to maximise its value.
More than 50% of the €721 mln raised for the HEVF fund has now been allocated, with other assets located in Germany, Denmark, Spain and the UK across the office, retail, hotel, residential and logistics sectors. The closure of the fund was announced in September last year after it exceeded its original target by more than 40%, with commitments from 16 predominantly European investors including 12 first-time partners.
Emanuel Coskun, head of Hines’ Stuttgart office, said: 'Hines has a large existing portfolio in Stuttgart with six assets in various sectors and submarkets across the risk spectrum from core to development, having invested in Stuttgart on behalf of both of Hines’ discretionary European funds, the Hines European Core Fund and the HEVF.
'Our local team has significant expertise in development, asset management and value creation and we are eager to create new value in the Karlshoehe Portfolio.'
Paul White, HEVF fund manager, said: 'The acquisition of the Karlshoehe Portfolio demonstrates HEVF’s strong belief in the Stuttgart market.
'The fundamentals in Stuttgart are exceptionally strong even amongst the major German markets, with unmet demand, effectively no central Class A vacancy and a positive trajectory for rents. Likewise, for residential markets, Stuttgart continues to attract and retain more affluent office-using employees and is also experiencing the wider trend of increasing appetite for more central urban living, leading apartment rents and prices upward.'
The transaction was financed by Landesbank Baden-Württemberg (LBBW), while Hines received legal advice from CMS, technical support from REC Partners and tax due diligence by EY. BNP Paribas Real Estate acted for the vendor.
