When Oxford Properties sold its flagship London asset, the Cheesegrater, in March for
£1.2 billion ($1.6 billion; €1.35 billion), industry commentators viewed the deal with CC Land Holdings as a shrewd piece of business, especially given the uncertainty surrounding London’s post-Brexit status and the record-breaking price involved.
But little did those voices realize that Oxford, the global real estate arm of OMERS, and joint venture partner Madison International Realty already had their eyes fixed on another of Europe’s iconic office towers, Berlin’s Sony Center.
The €1.1 billion deal confirmed last month caught many off-guard because the asset had previously been owned by Korea’s National Pension Service, a renowned aggregator and long-term holder of real estate assets with no apparent pressure to sell.
Given that NPS acquired the asset in 2010 from a group of German and US investment funds, including Morgan Stanley and Corpus Sireo, for €570 million, the deal meant the Seoul-based pension fund had almost doubled its money in seven years. Scott Kim, the fund’s head of global real estate, described the transaction as a “strategic, defensive sale which exceeded our expectations.”
The sale drew widespread praise from delegates at this year’s EXPO Real trade fair for the price achieved by NPS and for demonstrating that Berlin could compete with its European city rivals for overseas capital.
In contrast to the Cheesegrater deal, where the winning offer was significantly higher than the second placed offer, the under bids for the Sony Center were understood to be “close” to Oxford and Madison’s successful offer, reflecting the competitiveness for quality assets in the German capital.
Sony originally paid around €750 million to construct the 1.2 million-square-foot building on the historic Potsdamer Platz. Construction, including its enormous tent-like conical roof, reportedly inspired by Mount Fuji, was completed by 2000 and Sony installed its German headquarters in the building. It was formally opened by Sony chairman Norio Ohga, who conducted the Berlin Philharmonic Orchestra as part of the opening ceremony. Eight years later, as the global financial crisis took hold, the asset was picked up by the Morgan Stanley/Corpus Sireo investor group for around €600 million.
That Potsdamer Platz can be the scene of such deals is remarkable given its recent history. The area was left in ruins by Allied bombardment during World War Two and the square found itself acting as the border between the American, British and Soviet sectors in the subsequent division of Berlin. The Wall itself was built through the square in 1961.
The Sony Center’s origin can be traced back to the fall of the Wall almost 30 years later. The city’s planners decided to redevelop the ‘no man’s land’ area between the inner and outer walls, creating a ‘linking point’ where significant development could reconnect the divided city and act as a symbol of unity. Ironically, the square was again divided into four parts, this time sold to commercial investors Daimler, Beisheim, Park Kolonnade and Sony.