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December 9, 2014

Iconic Frankfurt asset sold to Deutsche AWM together with ECE Projektmanagement GmbH & Co. KG as part of a joint venture

Frankfurt’s iconic PalaisQuartier has been sold for more than €800 million in what is, by far, the largest commercial property transaction in Germany of 2014. The mixed use property complex was put on the market by Dutch company, Rabo Real Estate Group / KP Investments and subsequently snapped up by Deutsche Asset & Wealth Management (Deutsche AWM) together with ECE Projektmanagement GmbH & Co. KG as part of a joint venture for the existing property. Strabag AG has purchased the adjacent land plot.

Marking Germany’s largest commercial property transaction of 2014, the sale the sale also represents one of the top five transactions of the year in the whole of Europe according to JLL who advised on the deal on behalf of the seller. Jörg Ritter, Head of Retail at JLL Germany believes the transaction is an important one for the German real estate market for a number of reasons.

“Our global oriented marketing process has proven that there is an extraordinarily high level of interest from international investors for German trophy investments. Investors from as far wide as the USA, Europe, the Middle East and Asia offered more than €4 billion of equity for the asset. Our global roadshow was successful in creating an international awareness in Frankfurt and the property itself with investors from around 20 different countries coming to visit the asset.”

Commenting on another observed trend, Mr Ritter said, “In the past, investors sought to purchase single asset classes due to a sense of lesser risk. More recently we have noticed a marked global interest in more complicated, mixed use assets that take on the role of an urban microcosm in the best inner-city locations. The sale of PalaisQuartier is a perfect example of this trend.”

“The growing amount of property transaction volume attributed to international investors could have given the impression that German domestic investors have been more laid back towards their home country. But the PalaisQuartier transaction proves otherwise. In a thoroughly competitive bidder process, two well-known German investors and a developer were able to act in a joint venture and stave off a strong level of international competition,” concluded Mr Ritter.

The property ensemble, which was constructed between 2008 and 2011 and has a total lettable area of 115,000 m², is one of the most extraordinary urban building complexes in Europe. Situated directly on the Zeil, one of the highest retail turnover streets in Europe, the property complex combines four different building parts with varying uses demonstrating landmark architecture within an urban hub. The MyZeil shopping centre together with the office tower Nextower, the luxury hotel Jumeirah Frankfurt and the Thurn and Taxis Palais demonstrate an optimal use of urban space in the city.

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