Commercial Magazine

International Investments: Germany

By Victor Whitman

Germany’s position as a dominant player in U.S. commercial real estate has taken a hit. Among the top 10 investor countries during the 12-month period ending in June 2021, Germany posted the largest percentage decline as measured by dollar volume. Investment levels dropped by 51% year over year from third-quarter 2020 through second-quarter 2021, according to Real Capital Analytics (RCA).

That said, Germany was still a major player and ranked No. 5 among foreign sources of capital into the U.S. during this time. Institutional investors from Germany were at least partial investors in 44 properties with an overall acquisition cost of nearly $2.4 billion during these four quarters.

Three German companies — Deutsche Finance Group, BVK and Allianz — made RCA’s list of the top 20 cross-border buyers with a combined 11 deals involving U.S. properties. Among these, Deutsche Finance Group and BVK were the top two foreign investors in the world for U.S. office properties located in central business districts.

Undoubtedly, the splashiest deal in recent times came in October 2020. Deutsche Finance America and BVK partnered with New York real estate developer Michael Shvo’s SHVO on a $650 million deal to buy San Francisco’s Transamerica Pyramid, one of the most recognizable skyscrapers on the West Coast. Opened in 1972 on Montgomery Street, the so-called “Wall Street of the West,” the building takes up an entire city block and is reportedly the third-largest pyramid on the planet.

This deal, however, was only the latest in the partnership between Deutsche Finance America, BVK and SHVO, which has acquired nine high-end properties across the U.S. within the past three years. These purchases include the “Big Red” tower in Chicago and the former Coca-Cola Building in New York City’s SoHo neighborhood.

December 2020 was a busy month for German investment companies. That month, Allianz Real Estate of America agreed to purchase a 49% stake in a logistics portfolio through a joint venture with Dallas-based Crow Holdings. This portfolio encompasses 19 new industrial buildings, several of which are located in a logistics park in the Dallas-Fort Worth area. Other assets are in prime locations in Chicago, Dallas, Houston and Southern California. The purchase price was not disclosed.

Two other major deals occurred in December of last year. Germany’s Deka Immobilien was the sole investor in a $196 million purchase of a 22-story office tower in downtown Los Angeles. The 388,000-square-foot building had been recently renovated and was reportedly 90% occupied by 30 tenants at the time of the sale. That same month, the German fund Jamestown LP bought a 558-unit apartment community in Atlanta for $145 million.

In October 2020, Allianz bought a 45% ownership stake in a $400 million San Francisco office tower. The building’s 381,000 square feet were fully leased at closing, Bloomberg reported. ●


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