NorthStar Realty Finance to Buy One of Germany’s Tallest Office Towers

By Adrian Maties, Associate Editor

Frankfurt, Germany—NorthStar Realty Finance Corp. is expanding its European portfolio. The commercial real estate company recently announced that it has entered into a definitive agreement to buy one of Germany’s largest office towers.

NorthStar said it will pay €540 million, or about $607 million, for the Class A property. Although the company did not name the tower, it did say that it has about 738,000 square feet of space, with an occupancy of 98.5 percent, and an average remaining lease term of approximately eight years. NorthStar Realty’s Chairman and Chief Executive Officer David Hamamoto also added that the iconic tower is “one of a very limited number of buildings in Frankfurt with greater than 40 floors.”

Frankfurt has eight office properties with more than 40 floors, but the German media reports that only one fits NorthStar’s description. It is the Trianon, a 45-story skyscraper located at 16-24 Mainzer Landstrasse. The iconic tower was completed in 1993. It stands 610 feet tall, making it the sixth tallest office building in Frankfurt. The owners, Madison International Realty and the Morgan Stanley Euro Zone Office Fund have been looking for a buyer for the property since the fall of 2014.

NorthStar expects to earn an initial current yield of approximately 8 percent on its approximately $281.5 million of invested equity. After the deal is closed, the company will add the new tower to its spin-off, NorthStar Realty Europe Corp.

The New York-based investor announced its plan to spin-off its European real estate business into a separate publicly-traded REIT earlier this year, in February. At that time, it said that it expects to complete the proposed spin-off in the second half of the year. NorthStar Realty Europe will be listed on the New York Stock Exchange. With the addition of the Frankfurt office tower, it will have an an aggregate $2.6 billion portfolio.

NorthStar has been active on the Old Continent this year. In April, the company also announced the acquisition of a large, pan-European office portfolio. The purchase price was €1.1 billion, or about $1.24 billion. The 2 million-square-foot portfolio included 11 Class A office properties, located in some of Europe’s top markets: London, Paris, Hamburg, Milan, Brussels, Amsterdam, Rotterdam and Gothenburg.

Photo credit: trianon-frankfurt.de