BlackRock Real Assets sells Frankfurt office building

BlackRock Real Assets has sold a 28,000 sq m office building in Frankfurt as part of its European value-added strategy. This disposition marks the second realisation of the German value add portfolio and the third in total in the strategy. The price is undisclosed.

The office building ‘Lyoner Stern’ is located in the best spot of the Niederrad submarket of Frankfurt, at the suburban train station and is in the final stages of being refurbished and repositioned. Niederrad is the largest back-office cluster in Frankfurt, which has undergone significant transformation as well as infrastructure improvements in the last few years. Vacancy fell drastically due to office to residential conversion, and the rental markets have started to pick up from a historically low base since then.
Thomas Müller, Portfolio Manager within BlackRock’s European Real Estate business, says: “Lyoner Stern is another great success story and testament to our European investment strategy of targeting overlooked assets in the most liquid cities with the tightest occupational markets. With Lyoner Stern, the approach has allowed us to accelerate the business plans and lease up and sell the buildings ahead of schedule while capturing rental growth substantially in excess of our base case.”
Wolfgang Ködel, Head of Germany for Real Estate at BlackRock Real Assets, comments: “We are very pleased to have realized another strong result for our clients. We identified the transformation trend of Niederrad when vacancy was starting to decline as redundant office space was starting to be converted. We invested ahead of that trend, and vacancy has fallen by more than 30 per cent since we acquired the asset in 2016 and is now circa 65 per cent below its historic peak. As a consequence, we benefit from the rent and price uplift in an improved market. We continue to look for assets in submarkets with such irreversible structural changes across the most liquid office markets in Germany, i.e. Munich, Berlin, Frankfurt and Hamburg.”
Clifford Chance, CBRE Preuss Valteq and JLL advised the Seller.