KIC joins Brookfield on Potsdamer Platz purchase

The acquisition of the €1.4 billion Berlin trophy property portfolio is part of a greater focus on the German market for Brookfield Property Partners which has relocated its European chairman to the German capital.

Brookfield Property Group has completed the acquisition of Potsdamer Platz in Berlin from the Frankfurt-based real estate investment unit of Savills Investment Management. Brookfield initially signed a purchase agreement with Savills for the portfolio back in October 2015 and PERE understood the firm had plans to sub-sell some of the equity pieces of the portfolio.

The Toronto-based asset manager teamed up with a joint venture partner, reportedly Korea’s sovereign wealth fund Korea Investment Corporation, on the deal. The parties did not disclose the purchase price but Savills initially said “it is one of the largest transactions in Germany since 2008” and PERE understood the asking price for the portfolio to be around €1.4 billion.

Located in the center of Berlin, the portfolio includes seven offices and five residential buildings, as well as a mixed-use urban quarter including the Potsdamer Platz Arkaden shopping center. The portfolio also features a Cinemaxx cinema and the Stage Theater, the Mandala Hotel and some 30 restaurants and cafes, as well as more than 2,000 parking spaces in the underground car park beneath Potsdamer Platz.

One particularly well-known landmark is Potsdamer Platz 1, designed by Berlin-based architect Hans Kollhoff. The 103-meter high office tower in a prominent corner location serves as the gateway to the quarter.

The transaction’s completion signals an increased focus on the German market for Brookfield.

James Tuckey, chairman of Brookfield Properties Europe, has relocated to Berlin where he is heading Brookfield’s Berlin office. He commented: “Berlin represents a fantastic opportunity for Brookfield. I look forward to working with our management teams to further our plans for Potsdamer Platz and harness the opportunity that we are seeing in the German market.”

On the sell side, Savills Fund Management, previously part of SEB Asset Management before it was sold to London-based property services firm Savills in September and then rebranded, acquired the portfolio for the SEB ImmoInvest mutual fund, one of SEB’s funds, in 2008.

But SEB ImmoInvest had to be dissolved after failing to meet investor withdrawals. Since the global financial crisis, German real estate mutual funds have struggled to meet redemption requests. Research released by global property services firm Cushman & Wakefield said this enforced liquidation will result in German open-ended funds selling €9 billion of European assets by 2017.