South Koreans in pole position to buy €900m Frankfurt scheme

South Korean investors are understood to be in pole position to acquire the giant Palais Quartier mixed-use scheme in Frankfurt.

Palais Quartier was put for sale last month as part of Dutch bank Rabobank’s decision to phase out its commercial real estate division. Rabo Real Estate confirmed to PropertyEU that its 100%-owned unit, KP Investment, has appointed JLL to sell the complex, which is expected to fetch some €900 mln.

A South Korean institutional investor believed to be the National Pension Service of Korea (NPS) is the frontrunner in the bid to buy the Frankfurt mixed-use complex. Other bidders are likely to include global asset managers LaSalle, Invesco Real Estate and JP Morgan, acting on behalf of Asian and Middle East capital.

The multifunctional Palais Quartier provides a total surface area of 226,650 m2 and includes the MyZeil shopping centre, which features more than 80 retail units on 77,000 m2 of space, as well as a 32-storey office tower called Nextower; a five-star, 25-storey Jumeirah hotel; and the restored historical edifice Thurn und Taxis Palais.

The building was developed as a joint venture between Rabo Real Estate and Meyer Bergman. Rabo bought Meyer Bergman out of the partnership in January 2013. Palais Quartier is currently managed by KP Investment.

All parties declined to comment on details of the sale.

NPS is a public pension fund in South Korea and the third largest in the world with $300 bn of assets under management. The pension scheme has already been active in Germany with the acquisition of the landmark Sony Center in Berlin and is currently seeking to increase its overseas portfolio from 20% of total assets to about 30% in the next five years.

Earlier this week NPS also unveiled plans to market HSBC’s global headquarters in London's Canary Wharf for more than £1.1 bn (over €1.3 bn). JP Morgan, acting on behalf of NPS, has hired agents JLL and GM Real Estate to sell the iconic tower for £1.1 bn, or a net yield of around 5%.

In 2009, NPS bought the 102,000 m2 building for £772.5 mln (€863 mln) in cash. HSBC has full control of occupancy for the remaining 13 years of the existing inflation-linked 20-year leaseback period at a current rent of over £50 mln per annum.