Opernturm deal raises eyebrows during EXPO panel

Reports that JP Morgan is closing in on the acquisition of the Operturm office tower in Frankfurt for EUR 500-600 mln raised some eyebrows during a panel discussion at EXPO REAL on Tuesday. German newspaper Handelsblatt reported that JP Morgan is the last remaining bidder for Tishman Speyer’s 168-metre tower and has entered a two-week exclusivity period. The price is believed to be less than the EUR 600 mln Operturn was originally marketed for two years ago. Kanam’s Grundinvest fund pulled out of a deal to buy the property in the midst of the financial crisis in 2008.

Commenting on the news about JP Morgan during a panel entitled ‘entrance and exit strategies in uncertain times’, Martin Eberhardt, head of strategy property at Union Investment, said his company had looked closely at Operturm. He said the rumoured price tag in the region of EUR 500 mln seemed ‘really a lot’ for say a fund of EUR 5-7 bn.

Eberhardt told PropertyEU editor-in-chief Judi Seebus, who was chairing the discussion, that Union Investment’s retail funds would generally seek diversification and have an investment range of about EUR 50-200 mln. ‘Shopping centres are something different and exceptions are fine,’ he added, noting that Union Investment acquired Alexa shopping centre in Berlin for EUR 300 mln last February. Union Investment intends to invest EUR 1.5-2 bn annually over the next three to four years.

Stefan Brendgen, CEO of Allianz Real Estate Germany, said the insurer already had EUR 700-800 mln of property in Frankfurt. The latest acquisition was the Triton office building, bought for about EUR 200 mln from Dutch developer OVG in August. ‘To add another EUR 600 mln would be too much,’ Brendgen said. He added, however, that Allianz RE had no absolute maximum price ceiling. ‘But a deal has to make sense in the local environment.’ Allianz is putting EUR 1 bn of German properties up for sale as part of a ‘portfolio optimisation programme.