By Gail Kalinoski
Oxford Properties, the global real estate arm of the Ontario Municipal Employees Retirement System, is entering the Berlin market with the acquisition of Sony Center, a 1.2 million-square-foot mixed-use complex, for approximately $1.3 billion (€1.1 billion) from the National Pension Service of Korea. Madison International Realty is Oxford’s partner in the deal that includes the 26-story BahnTower.
The Sony Center, completed in 2000, spans nearly six acres and comprises eight buildings that have about 915,000 square feet of prime office space, 215,278 square feet of retail and leisure space and 67 residential units. Major office occupiers include Deutsche Bahn, Facebook, Sanofi, Sony, the state of Berlin and WeWork. Retail tenants include LegoLand, IMAX and Cinestar.
CBRE and Greenberg Traurig advised Oxford and Madison on the deal and Freshfields Bruckhuas Deringer represented Madison. Hines advised NPS Korea. BNP-Paribas, Eastdil, P+P Pöllath + Partners, EY and PwC advised Hines throughout the disposition.
A Little bit of Backstory
In 2000, Hines led the $767 million acquisition of the Sony Center for NPS, one of the largest pension funds in the world with about $525 billion in assets, from a Morgan Stanley managed fund. Hines has managed the property and its comprehensive asset management plan included strategic technical refurbishment and re-leasing at favorable rates.
“The Sony Center was the first investment we executed on behalf of NPS globally. With this sale we will harvest an outstanding success for one of our most important clients,” Lars Huber, CEO of Hines Europe, said in a prepared statement.
It was one of the first European investments for NPS, which later acquired and sold the HSBC headquarters building in London. NPS has also been active in North America and Asia and expects to continue growing its global real estate footprint.
“This strategic defensive sale exceeded our expectations and we are poised to continue to invest in global real estate in a selective manner,” Scott Kim, head of global real estate for NPS, said in a prepared statement.
Oxford’s Busy Year
For Oxford, the acquisition of Sony Center continues its relationship with Madison, a private equity firm that provides joint venture and preferred equity capital for real estate investors from its offices in New York, London and Frankfurt, Germany. The deal, expected to close in the fourth quarter, brings Oxford’s Continental European assets under management to about $2.7 billion (€2.3 billion) and total European assets under management to about $6.5 billion (€5.5 billion).
This summer, the firm acquired Window, an office building in La Defense, Paris, for about $588 million (€500 million), which was its fourth Paris asset purchase. Oxford’s European portfolio now comprises 17 assets in London, Paris and Berlin.
“It will complement our existing Paris portfolio, which now comprises 112,700 square meters (1.2 million square feet) of space across four properties. This acquisition is a meaningful step toward achieving our stated strategy of reaching C$5 billion of assets ($4 billion) of assets under management in Continental Europe by 2020, focusing on Berlin and Paris,” Paul Brundage, executive vice president & senior managing director, Europe, at Oxford, said in prepared remarks.
German CRE Market
The German commercial real estate market, including Berlin, has been attractive to international investors throughout the year. During the first half of 2017, more than $30.3 billion (€26 billion) of commercial property traded, and a record total transaction volume of $69.9 billion (€60 billion) is forecasted by year-end, according to global real estate services provider Savills.
In July, Hines had acquired Allianz Campus Berlin, a 650,000-square-foot office project to be predominantly occupied by Allianz Deutschland AG. That purchase was made by Hines acting on behalf of a Korean real estate fund managed by Vestas Investment Management in a share deal forward funding transaction. Hines will serve as asset manager of the property.