KanAm pulls out of OpernTurm trophy deal in Frankfurt

KanAm, one of the most active German open-ended fund managers, has pulled out of the acquisition of the OpernTurm trophy office tower development in the Frankfurt, Germany's banking and financial centre.

A KanAm spokesperson told PropertyEU that the fund manager had decided not to increase the proportion of financial properties and tenants in the portfolio given the ongoing turmoil in the global banking sector. She noted that OpernTurm is 50% pre-let and the rest would have to be let in the next year. 'Given the current market conditions it was decided to be on the safe side rather than the risky side.'

The acquisition of the OpernTurm property from developer Tishman Speyer - which was originally announced in September - would have been the first deal by KanAm grundinvest in Germany. The proposed transaction volume was not disclosed but it was thought to be in the region of EUR 500 mln. The development is expected to be completed in late 2009.

KanAm grundinvest is a EUR 5 bn fund which invests in prime offices in high-growth locations in major European cities outside Germany and offices in major North American cities. Explaining the departure from the norm, KanAm spokesman Michael Birnbaum said when announcing the deal in September: 'The OpernTurm is such a trophy building that we were prepared to make an exception and invest in Germany.'

'A building like this in the heart of Frankfurt's financial center doesn't come along every day. However, while we made an exception to buy this property, it's too early to say if this marks a change in strategy going forward,' he added.

The property, which comprises two interlinked office towers over 42-storeys, next to Frankfurt's historic old opera house, is still under construction. The 168-meter high towers, which were designed by Frankfurt-based architect Christoph Mäckler, are expected to be completed in December 2009. When completed, the towers will offer 67,000 m² of office space. In addition, there will be childcare services, a range of restaurants and an underground car park for 580 vehicles. UBS Deutschland and Philadelphia law firm Morgan Lewis have agreed to take space at OpenTurm, bringing the pre-let ratio to 50%.

Back in September Raffaele Lino, head of business development Europe at DTZ Corporate Finance in Frankfurt, told PropertyEU that the banking crisis was likely to make it more difficult to secure more pre-lettings in the building. 'It's harder to pre-let to banks in Frankfurt at the moment, given the current banking crisis and uncertainties regarding takeovers and job losses. For this reason - and given the OpernTurm's location in the heart of the financial district - it could be hard to find tenants. Also, given the current turmoil, there is a danger that banks may not be viewed as the most sought-after tenants, which could postpone the signing of any banks taking space,' he said.

Separately on Thursday KanAm grundinvest announced the completion of the acquisition of the newly completed 35,000-m² Citydel Business Centre near the centre of Moscow. The deal was originally signalled in July and while the investment volume was not disclosed industry sources suggested a figure of EUR 600 mln.