Godewind Immobilien AG signs an EUR 85m purchase agreement for an office tower in Frankfurt am Main
- Located in Frankfurt city center, the City Gate Tower boasts a total lettable area of around 23,300 square metres and 165 underground parking spaces
- The net purchase price is EUR 85m
- Rental income currently amounts to EUR 3.8m per annum
- Vacancy rate of around 13% indicates significant potential for value appreciation
Frankfurt am Main, 23 May 2019 – Godewind Immobilien AG (ISIN: DE000A2G8XX3, ticker symbol: GWD, Godewind), a real estate firm specialising in German commercial properties, has signed another purchase agreement to acquire an office complex. The property at the centre of this asset deal is a 28-storey office property in Frankfurt am Main known as City Gate. It is located on a site of approximately 3,600 square metres at Nibelungenplatz in Frankfurt’s Nordend district. The multi-tenant complex houses state institutions, public sector companies and various other service providers, offering them highly flexible office space in an area with excellent transport links. One of the property’s key advantages is the stable rental income it generates through its creditworthy, predominantly public-sector tenants. The office tower underwent modernisation in both 1993 and 2018 and offers 165 underground parking spaces and a further 28 outside parking spaces. The purchase price for 23,308 square metres amounts to around EUR 85m, or to an average of EUR 3,647 per square metre. The transaction will be completed in the third quarter of this year.
Situated in an attractive location, the property offers considerable potential for appreciation
The City Gate is a modern office complex in a central location with good public transport connections and significant potential for value appreciation. In 2018, City Gate’s sustainability was certified as “very good” by BREEAM, an internationally recognised certifier of first-class green buildings. City Gate’s potential rent at full occupancy is around EUR 4.3m per annum. Currently, its vacancy rate is at around 13.4% or 3,124 square meters and its annualised rental income around EUR 3.8m. This results in an initial gross yield of around 4.5%. The anchor tenant is the state of Hesse. On average, the existing rental agreements have a remaining term to expiry (WALT) of approximately 6.7 years. By implementing its active asset management approach, Godewind intends to further increase its performance metrics. By reducing vacancies, increasing rents and extending rental agreements with anchor tenants, it strives to capitalise on the property’s development potential. Currently, City Gate’s rents average at around EUR 14.60 per square metre and are thus below comparable market levels. Godewind intends to have implemented its vacancy reduction plans and market rent adjustments by 2020. Assuming full occupancy at current market rents, the property’s annual rental income will rise by approximately 13% to around EUR 4.3m. Funds from operations (FFO) will then amount to around EUR 3.1m. This corresponds to an average FFO return on equity of around 8.3% from 2020 to 2024.
Capital market environment harbours further potential for attractive financing arrangements
A financing arrangement at attractive conditions is to be concluded by the closing date. The average interest rate for all property financing arrangements entered into to date is currently 1.38%. Godewind aims to achieve a long-term “Net LTV” of 45 to 55%.
Outlook: Further growth in the pipeline
Thanks to this acquisition and the other acquisitions completed since October 2018, Godewind now has an office property volume with a total value of around EUR 850m and lettable space of around 293,000 square metres. Godewind intends to further optimise its existing assets and expand its portfolio of commercial properties organically. Following the latest successful letting drive, the company’s overall portfolio now has a vacancy rate of around 25%, which corresponds to an area of around 73,100 square metres. It therefore still offers significant potential for value appreciation.
About Godewind Immobilien AG
Based in Frankfurt, Godewind Immobilien AG is a listed real estate company specialising in German office real estate. The company’s acquisition focus lies on building up an attractive real estate portfolio with a focus on office properties. As an active portfolio and asset manager, Godewind strives for sustainable increases in earnings and income, which are supplemented by the regular realisation of added value potential. Including the current acquisition Godewind owns an office portfolio with a value of around EUR 850 million. In the medium term, the aim is to build a commercial real estate portfolio of around three billion euros with the help of the company’s wide-ranging network and by means of value-added acquisitions.
Based on its internal portfolio and asset management, Godewind Immobilien AG will manage commercial properties cost-effectively, enter into long-term tenancy agreements and thus increase its enterprise value. The company has tax loss carry-forwards for corporation and trade tax, as well as a tax-free capital reserve. The shares in Godewind Immobilien AG are traded in the Prime Standard segment on the Frankfurt Stock Exchange (XETRA). For more information, please visit https://www.covivio-office-ag.com.
Investor Relations Contact
Godewind Real Estate AG
Phone +49 69 27 13 97 32 13
Kirchhoff Consult AG
Phone +49 40 60 91 86 65
This announcement is for information purposes only and does not constitute or should not be construed as an offer to sell or subscribe for, or an offer to sell or subscribe for, or an invitation to make an offer to buy or subscribe for, or an invitation to make an offer to buy or subscribe for, any common stock of Godewind Immobilien AG (the “Company” and such shares, the “Shares”) in the United States of America or any other jurisdiction.
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