Peakside, Madison Sell Frankfurt Office Asset

The joint venture acquired the 516,600-square-foot Frankfurt Airport Center last year and invested in an extensive refurbishment program. Tenants include Lufthansa, Fraport and Airport Club.
Matthias Cordier
Matthias Cordier, head of investment for Germany, Madison International Realty

A partnership between Godewind Immobilien AG and ERWE Immobilien AG has acquired the shares for the office property of Frankfurt Airport Center in Germany from a joint venture between Madison International Realty and Peakside Capital AG for $190 million.

“These off-market opportunities are rare to find but we have been able to build a network across owners and operators throughout Europe allowing for these type of transactions,” Matthias Cordier, Madison International Realty’s head of investment for Germany, told Commercial Property Executive. “Madison is a capital partner that takes partial interest positions in attractive assets and provided strategic advice and a portion of the equity to complete this transaction after a failed process.”

Peakside acquired the asset on behalf of its Peakside Real-Estate-Fund II last year, and Madison made an investment through the International Real Estate Liquidity Fund VI. After the purchase, the investors extended the fixed term of the leasehold with the airport operator until 2090 and signed approximately 108,000 square feet of space to new and current tenants.

There was also an extensive refurbishment program launched, providing redesigned concepts for the public and rental spaces. That helped rental income grow by nearly 20 percent in a year’s time. It currently has a tenant roster that includes Lufthansa, Fraport, Airport Club and several airlines and service providers.  

Growth through improvements

Frankfurt Airport Center I consists of approximately 516,600 square feet of office and conference space and offers direct access to Terminal 1 of the Frankfurt International Airport. It also includes 182 parking spaces and is situated adjacent to the ICE train station.

“This asset in the submarket of the Frankfurt airport was undergoing a transition period. We worked with architects and our local asset manager on concepts including refurbishment of the entrance, elevators and general appearance of the property,” Cordier said. “Frankfurt is experiencing strong demand from domestic and international tenants and we took advantage of that trend, bringing the asset from 62 percent to 82 percent leased within a short timeframe.” 

Due to the property’s location, there is a clear demand from tenants, given the growing Frankfurt airport and the need of many employees to travel. “Frankfurt Airport is growing and we believed this will continue to attract businesses and employees with a need to travel,” Cordier said. “The property’s direct access to Terminal 1 is key, in addition to the growing infrastructure within the airport. This was appealing and ultimately was a selling point for our investment decision.”

According to Cordier, there is a real scarcity of product and Frankfurt Airport Center provides the new long-term owner with the potential to further improve the asset.

In January, Hyatt Hotels Corp. opened a Hyatt Place near Frankfurt Airport, marking the flag’s debut in Germany. 

Image courtesy of Madison International Realty