The 51,000sqm office complex that served as the headquarters of Deutsche Bahn 30 years ago is being acquired by a German pension fund and will be redeveloped into modern space for multiple tenants.
The brutalist building, constructed in Frankfurt at the start of the 1990s, will be sold through an unusual leasehold agreement, which will see its current owners retain ownership of the land and receive ground rent.
The leasehold is being sold by Hesse Newman Real Estate Number 3, a closed-ended fund for retail investors that was set up to own the building 10 years ago.
Meanwhile, an occupational pension scheme that wishes to remain anonymous, will look to take advantage of Deutsche Bahn鈥檚 departure from the building to reposition it amid a wider rejuvenation of the surrounding Europaviertal district.
No financial details of the transaction were disclosed, but according to a source, the building and the land was last valued at 鈧�121m.
QUEST Investment Partners manages the Hesse Newman vehicle through its QUEST Funds subsidiary and is also managing the acquisition and asset management of the building leasehold on behalf of the unnamed pension fund.
Roland Holschuh, managing partner at QUEST Funds, said the intention was to provide the appropriate risk-return profiles for both groups of investors, 鈥渂y separating the building from the ground鈥�.
He told 91传媒在线: 鈥淭hese retail funds are not usually set up鈥� to invest in redevelopment, repositioning and to take the risk of major refurbishment and so on. It鈥檚 just not their risk profile.鈥�
The institutional investor, meanwhile, is able to seek higher returns via the leasehold structure, which Holschuh said was 鈥渕uch more common in the UK than it is in Germany鈥�. Asked how unusual the approach was, Holschuh said he was not aware of another comparable transaction in the German market.
Holschuh said the departure of Deutsche Bahn after 30 years provided 鈥渉uge potential鈥� to modernise the building and capitalise on the revival of the surrounding area, which has seen the development of new office, residential and retail real estate.
The building, now known as RAW and recently given listed status, was designed by brutalist architect Stephan B枚hm at the end of the 1980s and completed in 1993. It will be converted into a multi-tenant property, with flexible commercial space, amenities and green spaces.
QUEST Funds will be looking to bring in some large tenants alongside a number of smaller ones.
鈥淭he development of the surroundings and the perception of the building has added a whole new value to [it],鈥� Holschuh said. 鈥淚t is part of a huge redevelopment scheme which has been completed.鈥�
For 30 years, the inaccessible building used to be 鈥渁 secluded Deutsche Bahn headquarters [with] a lot of security around,鈥� Holschuh said. 鈥淎nd now we have the chance to open this thing.鈥�
He added: 鈥淚t鈥檚 very functional, because it鈥檚 very flexible in how you can size floor plates to different tenants鈥� We are not intending to change the building a lot 鈥� on the contrary we just want to make it shine even more.鈥�
QUEST Investment Partners, which was set up in 2016, and QUEST Funds, launched in 2019, is focusing on the major German cities of Frankfurt, Munich, Berlin and Hamburg.
Holschuh, who co-founded QUEST Funds subsidiary after managing international real estate portfolios at Commerz Real for six years, said: 鈥淚t is very important to be local鈥� in current market conditions, 鈥漚nd that鈥檚 why we鈥檝e really taken the decision today to focus on Germany鈥檚 four cities鈥�.
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