News in the METROpolis of Düsseldorf
The METRO headquarters in Düsseldorf-Grafenberg has been sold in one of the largest office transactions of the last 10 years.
6 office buildings, 1 multi-storey car park
Total 75,521 sq m
"The size of the property was not insignificant for the submarket. All the more valuable was the advice provided by JLL."
Düsseldorf is the up-and-coming metropolis of the Rhein-Ruhr region, although the city does not have skyscrapers like Frankfurt. Large-volume properties with tens of thousands of square metres are therefore exceptionally rare. One of the few is METRO AG's headquarters in Düsseldorf's Grafenberg submarket, a campus with six office buildings, a multi-storey car park and over 75,500 square meters of lettable space. Previously part of a PATRIZIA AG fund, the property was now to be sold at a profit.
In a second-tier market like Düsseldorf Grafenberg, size is not necessarily a bonus. The sole tenant, METRO, an M-Dax company with over 150,000 employees, had been a firm fixture in the location since 1967. Its triple-net lease contract still had 20 years to run, but the extremely high volume of the property naturally raised the question of possible third-party/alternative use. In an advisory and agency capacity, JLL had the right answers and steered the sale process to success.
"The restructuring scenarios enabled us to present not just one Plan B, but two.”
Impressive sustainable restructuring scenarios
Initially, indicative financing offers were requested within the scope of an exclusive marketing mandate. JLL Debt Advisory examined and negotiated a variety of financing structures, particularly with a view to the tenant easement, before initiating the bidding process with three rounds of bidding. With an international network at its disposal, JLL was able to approach potential purchasers in Europe and around the world, especially in Asia and the Arab world. Two alternative use scenarios developed with JLL partners were at the centre of the marketing activities. One concerned the restructuring of the office space and the letting of the space on a building-by-building basis. The other foresaw a fundamental change from commercial to residential use through the creation of a new urban neighbourhood. Scenarios which were comprehensively prepared and checked for their profitability impressed the cohort of potential purchasers.
Despite the large lot size, numerous offers were received from German and international investors. These were evaluated by JLL for PATRIZIA to ensure maximum transaction security. Our team led the subsequent purchase contract negotiations exclusively with PATRIZIA; in addition, we assumed responsibility for communication with the media during the negotiation phase. This approach and implementation of our sales strategy delivered an excellent outcome for PATRIZIA.
Attractive value enhancement potential achieved
The METRO headquarters was sold to the Arminius Group in Frankfurt am Main. As asset manager for several German pension funds, the company has pursued its goal of greater investment in commercial real estate in Germany in the future.
PATRIZIA was able to achieve a very attractive uplift in value for its fund investors and the price was well above the submarket level for comparable properties. Thanks to JLL's commitment, the initial concerns about the large size of the property were successfully addressed.