Madison International Secures Stake in Central Europe’s Tallest Office Tower

By Keith Loria

Madison International Realty has acquired a 50 percent interest in the Warsaw Spire, an iconic office tower in Poland, for approximately $423 million, from the building’s owner Ghelamco, which will retain the other 50 percent stake in the property.

The acquisition was made on behalf of the company’s Real Estate Liquidity Fund VI LP, which is now an equal owner in the tower with the Ghelamco GP12 fund.

“We have a relatively specific strategy of providing liquidity to owners of quality real estate globally,” Derek Jacobson, Madison International Realty’s co-chief investment officer, told Commercial Property Executive. “As I focused on core markets of capital cities, Warsaw certainly fits into that category, and more importantly, becomes a very interesting microeconomic and demographic play.”

Rising 721 feet at its main tower, Warsaw Spire is the tallest office building in Central Europe and the transaction represented one of the country’s largest office real estate deals in years.

“The tower itself I would argue is probably the most prime office building in the market, and our partner Ghelamco, who developed the asset, is one of the premier developers in that market,” Jacobson said. “For us, it really checked all the boxes of what we were trying to accomplish in terms of direct secondary strategy.”

Award-winning Building

The 44-floor Warsaw Spire won the Best Office & Business Development title at the prestigious MIPIM Awards 2017. The tower boasts a hyperboloid glass façade, and has two auxiliary towers rising approximately 180 feet each, known as Warsaw B and C. It also features Plac Europejski, at the foot of the building, offering extensive public space with fountains, greenery and urban furniture.

The tower is currently 95 percent leased to a roster of international tenants including Samsung, JLL, Mastercard, Shire, The Heart, Daftcode, Panattoni and Ghelamco.

The building is located in the new business district of Warsaw at Rondo Daszyńskiego, nearby both private and public transportation, including Warsaw’s new second Metro line and multiple tram and bus routes.

The investment by Madison International Realty is in line with its strategy for Fund VI, which in 2016 raised $1.24 billion. This is the first entry in Warsaw for the company.

“Historically, it was lumped together with Central and Eastern Europe, but I think Poland has really developed strongly over the last couple of years, and very interestingly in a way that it’s become a real economic center, not just for domestic users but international interest as well,” Jacobson said.

Madison International Realty was represented by Greenberg Traurig, while Ghelamco was represented by Dentons, JLL and CBRE.

Looking for Opportunities

Last week, Madison International Realty partnered with Forest City Realty Trust Inc. on the acquisition of its partner interest in five assets at University Park at MIT, a 2.3 million-square-foot mixed-use science and technology park in Cambridge, Mass.

“We’ve been in both the U.S. and Europe for a long time, and despite relatively aggressive pricing in direct markets—buying and selling of whole assets—we see interesting opportunities to deploy our capital in to direct secondary markets such as a situation like this where an owner is looking to monetize some equity without selling control of the asset,” Jacobson said. “Our pipeline is as full as it’s ever been.”