Düsseldorf is the latest German city to see a string of office investment deals closing at yields under 3% due to investor demand.
Quantum’s circa €290 mln forward sale of the Heinrich Campus development is believed to be at a yield of 2.9%.
The company forward sold the 42,000 m2 project which is pre-let to Deloitte, to a club of institutional investors advised by Universal Investment and BNP Paribas REIM. PropertyEU understands they include Generali and BASF with reports that E.on’s pension fund is a third.
Local agents regard the price as a good one because the location is on the edge rather than in one of the city’s main submarkets, Kennedydamm, and because it is a forward funding. Colliers International advised Quantum and originally marketed the building last year at between €250 mln - €275 mln.
Last week Hines European Core Fund sold Metropolitan, a much smaller and more centrally-located office asset. The price has not been disclosed but is believed to also be comfortably under 3%.
R+V insurance bought the 7,000 m2, fully-let building on Gustav-Grundgens-Platz in Düsseldorf Schauspielhaus, which was completed in 2003. Agents believe a potential opportunity to expand the space in future underpins the yield.
Peter Epping, HECF’s fund manager, said: ‘The sale of Metropolitan is a successful example of our strategy to.. selectively realise profits through timely disposals. We are delighted with the value growth and double-digit returns we created for our investors with this property.’
In a third transaction, this time in the city’s Medienhafen submarket, BNP Paribas REIM and Cording Real Estate announced on Tuesday that they have sold the Media Tower on behalf of their Real Value Fund.
Conren Land has bought the 18-storey, 9,000 m2 building which was 50% vacant when RVF acquired it in 2016.
BNP’s German CEO, Claus Thomas, said Conren paid ‘significantly above most recent market value’ and the cash would be reinvested and the equity target for RVF increased because ‘institutional investors are showing considerable interest in value-add assets with potential to be repositioned as core investments.’
Georg Hölz, CBRE’s head of investment in Düsseldorf, said the city’s market was very strong. ‘Both the investment and letting markets are in a very strong condition. Last year was a record for investment with €4.5 bn of transactions and it was also a record year in office letting with 514,000 m2 leased compared to an average year of 350,000 - 400,000 m2.
‘(Our opinion of) the best yield was 3.15%, but in this quarter CBRE will change that to 2.9%- 3% because of recent deals showing pressure on yields.’
He added: ‘The number of locations where we will see these low yields and high prices is growing. Airport City, for example, a submarket outside the city centre, will see lower yields - maybe not 3% or below, but 3.3%-3.4%.’