TIAA-CREF Takes Berlin Shopping Center for $447M

In a joint venture with German shopping center developer mfi Management, TIAA-CREF has snapped up Gropius Passagen, a 1 million-square-foot asset -- the largest mall in Berlin -- for approximately $446.5 million.

By Barbra Murray, Contributing Editor

The German retail market continues to catch the attention of investors from all over the world, and TIAA-CREF is no exception. In a joint venture with German shopping center developer mfi Management fur Immobilien AG, the financial-services provider snapped up Gropius Passagen, a 1 million-square-foot property that carries the distinction of being the largest shopping center in Berlin. The partners took the premier asset off the hands of H.F.S. Immobilienfonds Deutschland 11 GmbH & Co. KG in a transaction valued at approximately $446.5 million.

Gropius Passagen has it all. The shopping center boasts a premier location in a densely populated area that will soon be home to the Berlin-Brandenburg International Airport. The asset also features a direct connection to a U-Bahn train station and 2,000 parking spaces. The shopping center’s prime location and convenient accessibility are merely complements to the biggest draw — the diverse group of 150 popular shops.

“Gropius Passagen reflects TIAA-CREF’s ongoing strategy to develop a diversified real estate portfolio, including high-quality dominant shopping centers in markets benefiting from strong catchment areas,” said Aymeric Thibord, director of real estate investment with TIAA-CREF Asset Management UK Ltd. “We believe Gropius Passagen’s robust tenant mix and track record and Germany’s strong economic position within the eurozone, when paired with TIAA-CREF and mfi’s active management, will help create value for our clients over the long term.”

The Berlin shopping center was not a German first for TIAA-CREF’s. Just four months ago, the financial-services provider closed its approximately $536.8 million purchase of Perlach Einkaufs Passagen, more commonly known as PEP, from RREEF Investment GmbH, thereby increasing its retail presence in the country by 650,000 square feet. And TIAA-CREF’s fondness for the country is hardly new. It is owner of the 323,000-square-foot Erlangen Arcaden, a five-year-old shopping center in Erlangen that the financial-services provider developed with mfi, which manages the property.

There’s something about Germany, specifically, retail in Germany. In 2011, retail assets closely trailed office assets as investors’ favorite property type, accounting for 37 percent of transaction volume, according to commercial real estate services firm CBRE Group. Furthermore, shopping centers topped the retail list, with investments totaling nearly $6.2 billion.