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Madison exits ‘iconic’ Frankfurt tower for €540m

The Trianon Office Tower was sold to New York-listed NorthStar Realty Finance which is looking to spin-off its European real estate business into a newly-formed publicly-traded REIT later this year.

Madison International Realty, the New York-based real estate investment manager, and investment bank Morgan Stanley have sold the ‘iconic’ Trianon Office Tower in Frankfurt to NorthStar Realty Finance for €540 million.

Madison purchased a 56.95 percent interest in the Trianon back in 2012. Although Madison International declined to disclose the purchase price at the time, PERE previously reported the firm acquired the stake for €92 million.

Prior to Madison’s ownership, the Trianon complex was owned by Morgan Stanley on behalf of two open-ended real estate funds, the Morgan Stanley Eurozone Office Fund – which continued to be a minority owner – and Morgan Stanley P2 Value.

Trianon is one of the tallest buildings in Germany offering approximately 740,000 square feet of space across 47 floors. The building is 98.5 percent occupied and has a weighted average lease term of approximately eight years with two tenants comprising over 70 percent of gross rents.

NorthStar expects to earn an initial current yield of approximately 8 percent on its approximately €250 million of invested equity, the firm said.

Trianon is expected to be contributed to NorthStar Realty Europe (NRE), a publicly-traded REIT NorthStar is planning to launch later this year by spinning-off its European real estate business.

“We believe this prominent office tower will be a great addition to NRE given its strong fundamentals, including being one of a very limited number of buildings in Frankfurt with greater than 40 floors, which demand premium rents in the market,” NorthStar Realty's chairman and chief executive, David Hamamoto, commented.

BNP Paribas and CBRE advised the owners during the sale process.