Capitaland today announced their acquisition of a 94.9% stake of Main Airport Centre (MAC) in Frankfurt.
The agreed property value of EUR 245m or S$392m is slightly lower than valuation of EUR 248.2m or S$397m.
Located at Unterschweinstiege 2-14, 60549 Frankfurt, the property has 13 levels consisting of a multi-tenanted office, multi-storey carpark and a petrol station.
The property has a built up area of approximately 648,000 sqft and sits on freehold land.
Out of more than 30 tenants, key occupiers include Dell, Mastercard and Lufthansa.
The weighted average lease expiry (WALE) is approximately 4 years, with less than 20% of leases expiring in the next two years. This provides certainty of income to Capitaland at least for the next 2 years.
The purchase was made on a gross investment yield of 5.5%.
Occupancy is presently at 84% and is expected to rise to 95% by June 2018 based on the leases that have already been secured.
Presently, Capitaland owns or manages 721 serviced residences across five properties across Germany.
This acquisition of Main Airport Centre will be the first office property in their portfolio, adding a new and recurring source of income from Europe.
One rationale of the acquisition is that Germany’s economic growth is on track for its best year since 2011.
GDP grew 0.8% in 3Q2017, topping the 0.6% median forecast in Bloomberg’s survey in Nov 2017.
In Frankfurt, the office market is on an upswing as major multinational companies and Japanese banks open new offices in the city.
Leasing remained strong in 3Q2017, with a 24% year over year increase in take-up of leases.
Adding to the good performance, transaction volumes for offices grew approximately 13% year over year.
Another supporting factor for the acquisition is that Frankfurt is Germany’s financial centre.
At the centre of the dynamic Rhine-Main Metropolitan area, the city is in central Germany. Four hundred million people live within a 200km radius and 365,000 businesses in Rhine-Main area generate an annual GDP of approximately EUR 200b.
Employing 2.9m people, important sectors include ICT, logistics, automotive and chemical industries.
Well known companies include Lufthansa, Deutsche Bahn and Commerzbank.
Slides of Capitaland’s acquisition of Main Airport Centre can be found in the following.