Deutsche AM bets on London with £310m double office buy

Despite the pitfalls of the ongoing Brexit negotiations, the Frankfurt-based investment management firm said it still saw the UK capital as a key market in Europe and has backed its stance with the purchase of two Bankside buildings. 

Deutsche Asset Management, the Frankfurt-based investment management firm, has purchased two large London office buildings on behalf of one of its open-ended real estate funds for around £310 million ($397 million; €349.6 million).

The assets, 2 & 3 Bankside, are located directly behind the city’s famous Tate Modern gallery in Southwark, a district south of the City of London.

Combined, the two buildings comprise more than 385,000 square feet of mainly office space, but also contain a retail element. The two nine-story properties, which were built in 2007, are fully let with the Royal Bank of Scotland as the anchor tenant.

Deutsche acquired the assets using capital from its 40-year-old open-ended vehicle, GrundBesitz Europa, which is aimed at retail investors. Through the vehicle, Deutsche targets a range of core European assets across all sectors but mainly office, hotels and logistics.

The seller was M&G Real Estate, the London-based real estate investment arm of pension fund Prudential.

“London remains one of Europe’s most attractive markets for real estate investment, despite Brexit,” said James Petit, head of real estate, UK and Ireland at Deutsche. “Bankside are two quality buildings in an attractive, emerging location. The regeneration of this area is making it one of London’s fastest growing submarkets and an increasing magnet for tenants,” he added.

A spokesman for Deutsche said the firm did not comment on performance targets for single assets. However, according to BVI, the German investment fund association, GrundBesitz Europa’s lifetime return has been around 2.7 percent.

Deutsche’s primary core open-ended vehicles, aside from GrundBesitz Europa, are the GrundBesitz Global and GrundBesitz Deutschland vehicles, both aimed at retail investors. In addition to retail funds, Deutsche also runs a variety of funds across a range of risk strategies for its institutional clients.