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CapitaLand, Lum Chang acquire Frankfurt office building for 234.3m euros in cash
A JOINT venture between CapitaLand and Lum Chang Holdings has acquired a Frankfurt, Germany office building for 234.3 million euros (S$375.1 million) in cash.
CapitaLand, a real estate developer, holds 94.9 per cent of the joint venture and paid 222.3 million euros of the consideration. Lum Chang, a construction company, holds the remaining 5.1 per cent.
The freehold, multi-tenanted building known as Main Airport Center will be CapitaLand's first office building in Germany.
The property has an agreed value of 245 million euros. It is 84 per cent occupied with more than 30 tenants, and leases secured for 2018 are expected to raise occupancy to over 95 per cent in June 2018. Current tenants include Dell, Mastercard and Lufthansa.
The building sits close to Frankfurt Airport, and is a 20-minute drive to the city's central business district. A new metro station is expected to open in 2019 about 600 metres away, which will offer a 10-minute direct connection to the city centre when ready. A third airport terminal is also expected in 2023.
"Demand for commercial real estate is expected to rise given Germany's positive economic outlook," CapitaLand chief investment officer (designate) Lee Chee Koon said in a statement. "Frankfurt's office market is on an upswing as many major multinational companies and Japanese banks are planning to open new offices in Frankfurt... We see strong potential to step up investments in commercial real estate in Europe and key cities worldwide, as we expand our serviced residence and mall portfolios."
CapitaLand chief executive Lim Ming Yan said that there are significant investment opportunities in key gateway cities in Europe, Australia and the United States.
"We will remain aggressive but disciplined to reconstitute our portfolio and deploy capital to quality higher yielding assets, while continuing to grow our recurring income base by strengthening our operating platforms and assets under management," Mr Lim said.