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Deutsche Bank Sells Frankfurt HQ Towers for $835 Million


Frankfurt-skyline.jpg

Frankfurt skyline

All in the family - that's the apparent credo of Frankfurt-based Deutsche Bank AG, one of the world's largest lenders.

In a prepared statement, the bank said it is selling its twin 246,000-square-foot, 38-story and 40-story glass-clad office towers for about $835 million (€600 million).

The buyer:  DWS Investments, a closed-end real estate fund and an arm of the bank's asset-management division.

In a humorous twist, Deutsche Bank nick-named the landmark buildings Soll und Haben.  Translation:  Debit and Credit.

The towers have dotted the Frankfurt skyline for 26 years. They were opened in 1985.

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Michael H. Meissner

"The Deutsche Bank towers underline the role of Frankfurt as the most important financial city in the euro zone," Michael Meissner, a law partner at Dechert LLP, told The Wall Street Journal.  "It is the iconic financial building."

The transaction is expected to close in May.

The deal drew the attention of the country's real estate watchers because of its unorthodox format.  Other banks have sold their headquarters to investment firms, but not to one of their subsidiaries.

The buildings were owned by another closed-end fund from 1984 until 2007, when Deutsche Bank bought them and made extensive renovations. 

Deutsche Bank's construction costs during the renovation have been estimated at about €200 million, and the bank paid about €271 million for the property in 2007, according to the WSJ.

The value of the land and other investments bring the building to its current market value.

Commercial property sales have been increasing throughout Germany.

Frankfurt's 42-floor Opera Tower, with Swiss bank UBS AG as its largest tenant, was sold last year to investors for about €550 million.

Berlin's Sony Center, in what was once no-man's land between East and West Berlin, was sold for about €750 million to a South Korean pension fund, the WSJ reports.

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Kai Klose

"There's high demand in Germany for these kinds of assets," said Kai Klose, a real-estate equity researcher with Berenberg Bank, told the WSJ.

In 2010, the investment market for commercial real estate in Germany reached €19 billion. Investors like them because they offer a hedge against inflation with long-term stable returns, he said.

According to the WSJ, HSBC Holdings PLC sold its New York headquarters to an Israeli investment holding company in 2010 for $330 million, its Paris headquarters to French Properties Management for €400 million in 2010, and its London headquarters to a South Korean pension fund for £772.5 million in 2009. 



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