Union investment acquires Frankfurt development for EUR 93m

Union Investment has acquired a commercial building development in the German financial centre of Frankfurt from urban developer Vivico Real Estate for EUR 93 mln. The project is to be contributed to Union Investment's UniImmo: Deutschland open-ended real estate fund.

The completed building will have a gross floor area of approximately 34,000 m2, comprising around 23,000 m² of rental space and underground parking for 181 cars. The aluminium, glass and natural stone façade is designed to match the urban character of the boulevard, while integrated green spaces will be visible from the street. The architects responsible are Schneider + Schumacher. Completion is scheduled for 2010.

The transaction was brokered by Atisreal.

The six-storey office building is currently under construction by Vivico on the 'Nord 1' plot of Frankfurt's European Quarter, directly adjacent to the Mövenpick Hotel Frankfurt City. The ground-breaking ceremony took place on 28 October 2008.

Some 50% of the space has been let to BNP Paribas and Union Investment has signed a general lease with Vivico for the remaining space. Vivico is handling construction and marketing of the building itself.

The deal comes weeks after KanAm, another German open-ended fund manger, pulled out of the transaction of the trophy OpernTurm office development in Frankfurt. Market sources estimated the proposed transaction volume was in the region of EUR 500 mln. OpernTurm is 50% let and KanAm said it decided to pay it 'safe' given that it might be difficult to let the rest of the space due to the turmoil in the financial markets.

Fabian Hellbusch, head of communications at Union Investment, said there was no real comparison between the 42-storey OpernTurm, with 67,000 m² of lettable space, and the Vivico development . He pointed out that BNP Paribas has an excellent rating and Vivico is in charge of letting the building. 'The property is in one of the best locations in Frankfurt, a city that benefits from being a major trade show venue and added to the diversified nature of UniImmo: Deutschland,' he said.

Union Investment is one of the few managers of major German open-ended funds not to have imposed a freeze on redemptions in recent days. Hellbusch said that Union Investment does not see the need to suspend redemptions at the moment as its open-ended fund vehicles have very good liquidity. He noted that investors in general are a 'bit nervous' but Union Investment has not experienced the high rate of withdrawals of institutional money in recent days comparable to the situation at other German fund managers.

While Union Investment remains cautious, it is still looking for investment opportunities from the viewpoint of a long-term investor, Hellbusch added. 'UniImmo: Deutschland has a liquidity ratio of 40% equating to EUR 1 bn, so we can still operate and invest,' Hellbusch said.