Union Investment strikes again in Amsterdam

Union Investment has added to its portfolio of assets in Amsterdam’s Zuidas (South Axis) business district by buying the ITO + SOM office complex from Commerz Real.

The Hamburg-based German fund manager is paying around €244 mln for the two-building complex, which market watchers say equates to a gross initial yield of 6.7%. The assets, offering a total 52,000 m2 of office and retail space, will be added to Union’s open-ended UniImmo: Europa fund.

Commerz Real acquired ITO + SOM as a project development for its open-ended hausInvest fund in 2002. The complex was delivered in 2005 as part of a broader urban development scheme in the heart of the Zuidas district. The two buildings are currently 97% let to 36 tenants, including consultancy firm Accenture, law firm Houthoff Buruma and Boston Consulting.

The complex had a book value of €235.7 mln at end-September 2012, with the ITO tower valued at €167.7 mln and the SOM building at €68 mln.

The two buildings take their names from the two architect firms which designed them: Toyo Ito & Associates for the 25-storey, 34.551 m² ITO tower and Skidmore, Owings & Merill (SOM) for the five-storey, 15.061 m² SOM building. Union Investment is targeting a BREEAM Very Good rating for the ensemble, which was developed by G&S Vastgoed, ING Real Estate and Fortis Real Estate Development.

‘With a relatively low vacancy rate of 6.8%, Amsterdam’s Zuidas district is one of the Netherlands’ most attractive office markets. Demand for office space in this core location is rising significantly,’ commented Philip La Pierre, head of investment management Europe at Union Investment.

Union Investment was advised on the transaction by Savills and Nauta Dutilh. CBRE and Houthoff Buruma acted for Commerz Real.

Underscoring its confidence in the Zuidas, Union Investment has also purchased two office developments in the area in just over a year. In January it acquired the new headquarters of law firm Stibbe for €54 mln from developer Dura Vermeer. And in March 2013, the fund manager acquired a neighbouring project, also being developed by Dura Vermeer, for Dutch coatings specialist AkzoNobel.

According to PropertyEU Research data, Union Investment acquired AkzoNobel's new 15,216 m2 headquarters for €82 mln, reflecting a yield of 6.2% for its Unilmmo: Deutschland fund. The project is due to be delivered in 2015.

Besides office assets, Union Investment also owns the Motel One development as well as the UN Studio (25,000 m²) and 207-room Crowne Plaza hotel in the Zuidas district.

Including the ITO + SOM acquisition, Union Investment now owns nearly 107,000 m² of office space and 522 hotel rooms in the Zuidas area, outstripping German peer Deka which owns the Vinoly, The Rock and Symphony buildings totalling 94,000 m². The biggest office landlord in the area remains CBRE Global Investors' Dutch Office Fund, which owns the WTC Amsterdam complex comprising 125,410 m².

The only high-profile building in the Zuidas district still seeking an investor is The Edge, a creation of green developer OVG which will house the new headquarters of accountancy firm Deloitte and law firm AKD.