(LONDON) – Hines, the international real estate firm, has acquired the Karlshoehe Portfolio in Stuttgart, for a price in excess of €300 million on behalf of its Hines European Value Fund (HEVF). The portfolio consists of 13 office buildings, including two towers, totaling more than 90,000 square meters of net rentable area. The portfolio is 98 percent leased, largely to Allianz. The buildings benefit from a strong CBD location in a true mixed-use, office and residential quarter on a prestigious Karlshoehe site which serves to connect the CBD and an urban neighborhood. The buildings are in close proximity to the suburban train station “Stadtmitte” and Karlshoehe Park with picturesque views into the hills of Stuttgart.
The Karlshoehe Portfolio has served as Allianz Life Insurance’s historic headquarters since 1927 and they have gradually expanded into new buildings in the surrounding area over time. Allianz will develop a new campus at Stuttgart-Vaihingen to consolidate its Stuttgart inner-city locations. After continuing a close relationship with Allianz as the key tenant in interim, Hines ultimately plans to evaluate each component piece of the portfolio to achieve its highest and best use, likely including refurbishment and re-leasing of office space and conversion and redevelopment of new space.
The acquisition of the Karlshoehe Portfolio is HEVF’s second investment into the Stuttgart office market and the sixth investment by the Fund since December 2017. Over 50 percent of the Fund’s €721 million investor equity commitments are now allocated to a diversified portfolio including office, retail, hotel, apartment and logistics in Germany, Denmark, Spain and the UK.
Emanuel Coskun, head of Hines’ Stuttgart office, said: “Hines has a large existing portfolio in Stuttgart with six assets in various sectors and submarkets across the risk spectrum from Core to Development, having invested in Stuttgart on behalf of both of Hines’ discretionary European funds the Hines European Core Fund and the HEVF.
Our local team has significant expertise in development, asset management and value creation and we are eager to create new value in the Karlshoehe Portfolio. We strongly believe in both the historical quality and future potential of this central neighborhood. As Swabian natives, we take great pride in stewardship and improvement of the city’s urban fabric. We look forward to working with Allianz and city authorities, on this exciting next chapter for the Karlshoehe quarter.”
Paul White, HEVF Fund Manager, said: “The acquisition of the Karlshoehe Portfolio demonstrates HEVF’s strong belief in the Stuttgart market. The city attracts a highly diversified occupier base for office space, including the financial and insurance sectors, but also sophisticated technology bases for manufacturers, engineering and other industry corporations. The fundamentals in Stuttgart are exceptionally strong even amongst the major German markets, with unmet demand, effectively no central Class A vacancy and a positive trajectory for rents. Likewise, for residential markets, Stuttgart continues to attract and retain more affluent office-using employees and is also experiencing the wider trend of increasing appetite for more central urban living, leading apartment rents and prices upward. For these reasons, we have great confidence in this large-scale, inspiring investment.”
Landesbank Baden-Württemberg (LBBW) served as the financing bank in this transaction. Hines was legally supported by CMS, technically supported by REC Partners and tax due diligence was provided by EY. BNP Paribas Real Estate acted as transaction adviser on behalf of the vendor.
Hines is a privately owned global real estate investment firm founded in 1957 with a presence in 214 cities in 24 countries. Hines has approximately $120.6 billion of assets under management, including $66.5 billion for which Hines provides fiduciary investment management services, and $54.1 billion for which Hines provides third-party property-level services. The firm has 128 developments currently underway around the world. Historically, Hines has developed, redeveloped or acquired 1,348 properties, totaling over 444 million square feet. The firm’s current property and asset management portfolio includes 512 properties, representing over 223 million square feet. With extensive experience in investments across the risk spectrum and all property types, and a pioneering commitment to sustainability, Hines is one of the largest and most-respected real estate organizations in the world. Visit www.hines.com for more information.
Since entering Europe in 1991, Hines has grown its European platform to include a presence in 55 cities in 13 countries and Hines currently has €16.7 billion of assets under management in Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Poland, Spain and the United Kingdom.
About Hines European Value Fund
HEVF is a Euro-denominated, Luxembourg-based investment fund launched in July 2017. Managed by Hines, its objective is to acquire a portfolio of core-plus and value add commercial real estate throughout Europe on behalf of an institutional investor group.
In August 2018 Hines announced the final closing of HEVF, with the total fund size exceeding €720 million of equity commitments, surpassing its original target by more than 40 percent. As the flagship value add fund for Hines in Europe, HEVF has a geographic mandate across the European Union (plus Norway) and flexibility of scope to invest in office, retail, logistics, residential and mixed-use opportunities in primary institutional markets.