Hines secures Munich's Lengarten in €400m deal at below 2.75%

US privately held developer-investor Hines has emerged as the buyer of Lenbach Gärten, also known as Lengarten, in Munich on behalf of two investors including a domestic institutional player.

PropertyEU's sister publication Europroperty reported last week that Norges Bank Investment Management was in exclusivity to sell the asset, which comprises two office buildings with a total of 30,000 m2. Financial details were not disclosed, but agents said that there has been ‘a huge amount of interest‘ and the winning bidder’s agreed price equates to a yield under 2.75%.

The Norwegian sovereign wealth fund mandated CBRE in the summer to put the fully-let complex on the market. At the time, the market felt that up to €400 mln could be achievable. Norges bought the asset five years ago for €176 mln.

Lengarten is the headquarters of management consulting firm McKinsey (pictured) with Apple now the second largest tenant after leasing space in the complex in the summer.
Christian Meister, managing director at Hines Immobilien said: 'With the acquisition of the two office buildings we have secured a true trophy asset for our investors in Germany's leading economic hub. The office complex has a strong tenant structure and thus a continuing stable cash flow. The transaction is therefore in line with the investors' strategy of investing in the best office properties in attractive locations over the long term.'

new lows below 2.75%, according to market experts. In the Bavarian capital, a German insurance group has won the bidding for Blue Tower with a bid of approximately €275 mln.

The building, part of the Von der Heyden Group, Zurich Group and Bayern Projekt’s 62,000 m2 Bavaria Towers, went on the market for €230 mln, €45 mln less, which equated to a 3.3% yield. The newly-completed Blue Tower is let on 10-year leases also to tech companies. Colliers International is advising the vendors.

Meanwhile in Dusseldorf, another German insurance buyer is believed to have the Heinrich Campus development under offer at a yield comfortably below 3%. Quantum’s project is pre-let to Deloitte.

One agent commented: ‘When yields get below 3% it is German investors buying the best new buildings in the best locations. (Most) international investors tend to (only) pay that in their own domestic markets. These investors are using negative interest rates to justify a stronger entry point yield.’



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