Client story

A Value-Add property par excellence

A challenging located property is looking for a new owner. JLL finds an investor which recognises the value enhancement potential, and then arranges the resale for them two years on.

Location

Frankfurt-Höchst

Spotlight

Sold twice in two years

Industry

Sale prices confidential

Square Feet

8,524 sqm total lettable area

Frankfurt-Höchst was considered difficult. We had a fresh view of the location and JLL convinced us of the property’s potential – in the end, it proved successful for all involved!

Andreas Krieger, Managing Director, Rockstone HH Real Estate GmbH, Hamburg

It was not an easy assignment, for which an insolvency administrator approached JLL in 2016. A property built in 1992 in Bolongarostrasse in Frankfurt-Höchst was to be sold. It was predominantly commercial use with an occupancy rate of approx. 80%, i.e. 20% vacancy, and an overall WALT of around one year.

The location on the outskirts of Frankfurt was considered critical at that time. There was little demand for commercial space, few enquiries or changes in tenants, and there were no comparable transactions.

A property without potential? Our professional opinion was otherwise, and this was evident from our marketing approach: "The market is coming". In the long term, suburban communities such as Höchst would certainly benefit from rental trends in the city of Frankfurt. And so, the task was to find a developer who could recognise the future value enhancement potential of this rather difficult location and address the revitalisation of 75% of the space. Investment could allow the affected 8,500 sqm of space to be upgraded and appropriately positioned in the market.

A new tenant. A substantial value enhancement

JLL prepared marketing materials with a corresponding analysis of potential for the future development of the property in the market. In the subsequent structured sales process, Rockstone Real Estate GmbH & Co. KG submitted the successful bid in 2017. The Hamburg-based developer purchased the building as a Value-Add property and was immediately rewarded when the City of Frankfurt Jobcenter approached the new owner shortly afterwards to rent almost all of the commercial space. Rockstone offered the Jobcenter a long-term lease and had the building refurbished and remodelled for the new tenant.

The enhancement in the value of the property was obvious and suggested a quick resale. In a pitch organised by Rockstone, JLL beat off the competition, so that in 2018 our team was entrusted for the second time with the sale of Bolongaro82. We emphasised the stability of the cash flow and the sustainability of the location, and prepared environmental and extensive cash flow analyses. Interest from domestic and international investors with a long-term focus was correspondingly high. In July 2019, the purchase agreement was signed between Rockstone and an investment fund managed by the LHI Group.

The location was a challenge. But we were betting that the market would arrive. And we were right!

Thomas Lindner MRICS, Director of Office Investment, JLL Frankfurt am Main

Substantial value enhancement

The marketing strategy worked. JLL's assessment was proven correct: as the Frankfurt office market is developing dynamically in suburban areas, Bolangaro82 became an interesting proposition for institutional investors. And so, two years after it was acquired, converted, refurbished and re-let by Rockstone, it was resold with a significant increase in value. For Rockstone, this project was their successful entry into the Frankfurt market. After their Höchst investment, Rockstone purchased their next property in Frankfurt's Westend in Q4 2019, brokered by JLL.