PwC pension fund eyes Frankfurt skyscraper stake - source

LONDON Wed Aug 28, 2013 4:02am EDT

LONDON Aug 28 (Reuters) - A PricewaterhouseCoopers (PwC) pension fund is in talks to buy a stake in a German skyscraper, in what could be one of Europe's biggest property deals this year, a source close to the negotiations told Reuters.

Austrian developer CA Immo said on Tuesday it was in talks with one bidder to sell a stake in the 200-metre Tower 185 in Frankfurt, in which PwC is the largest tenant, as part of a wider disposal plan to cut its debt by 600 million euros ($804 million) this year.

In March, the Vienna-based company said Germany's fourth-tallest skyscraper was worth about 500 million euros and it hoped to sell a 75 percent stake, representing a deal of about 375 million euros.

The source did not confirm the size of the stake under discussion with the pension fund nor how close any deal was.

CA Immo and PwC declined to comment.

The PwC pension fund is run for employees of the company in Germany and operates as a separate entity from the main accountancy firm, whose logo is at the top of the tower that opened at the end of 2011.

Real estate in major cities in European economies such as Germany and Britain is in demand among property investors for its safe returns in choppy financial markets, though some are slowly returning to the higher returns on offer in countries such as Spain as euro zone break-up speculation fades.

CA Immo said in May it expected "a successful outcome to be confirmed during the summer" though on Tuesday it said it hoped a deal for an undisclosed stake would be completed in the second half of the year.

Local real estate agents said the tower's location may explain why it hadn't been snapped up already, with the building lying several hundred metres from the main financial district.

"It's a stone's throw too far away from the prime area," said one Frankfurt broker, who added the fact PwC dominated the tower may also put off other tenants from taking space in a building that is 80 percent let, according to the building's website.

Brokers said any sale would likely represent a yield, or the annual rent as a percentage of the property's value, of about 5.5 percent to 5.75 percent as opposed to five percent or under for the best Frankfurt office buildings in prime locations.

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