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The largest European office building deal in years has collapsed in a sign that economic uncertainty is hitting a real estate market that had just started to recover after a tough period.
A roughly €850mn sale of OpernTurm, a Frankfurt office tower prized for its location and reliable tenants such as Swiss bank UBS, is not proceeding after the prospective buyer failed to raise the necessary funds, according to people familiar with the matter.
Erich Schwaiger, an entrepreneur and real estate developer in Munich, had been in advanced talks to acquire the building from JPMorgan Asset Management and Singapore sovereign wealth fund GIC, the people said.
The building’s owners may consider refinancing the building instead, some of the people added.
Schwaiger did not respond to a request for comment. JPMorgan Asset Management and GIC declined to comment.
After building a sizeable residential real estate portfolio in Munich, Schwaiger recently pivoted into commercial property, snapping up prime retail assets after the insolvency of René Benko’s Signa.
An acquisition of OpernTurm would have been the largest European office building sale since September 2022, when 21 Moorfields, Deutsche Bank’s current UK headquarters in the City of London, traded for €935mn, according to data from MSCI.
The industry was optimistic about deal prospects for the year when it gathered at a conference in Cannes a few weeks after the US and Israel launched their war on Iran. But as financing costs have inched upwards and the conflict has stretched on, some sales are sputtering as investors weigh whether to pile in now or wait.
Investment volumes in the first quarter across all commercial real estate sectors were down 10 per cent from a year earlier, according to MSCI data.
“It is external volatility, principally the conflict in Iran, that has once again spooked the market and caused the slowdown in dealmaking,” analysts at the index provider wrote.
One of the people familiar with the potential Frankfurt transaction said the OpernTurm was a “trophy asset” underpinned by long-term rental contracts. Any increase in value would have to come gradually through rent bumps rather than large-scale redevelopment.
The person added that the desired valuation was unrealistic in the current climate, unless buyers had a specific strategic desire to increase their exposure to Frankfurt for diversification reasons.
Real estate investors and developers had been readying to dive back in after a painful stretch in which the 2022 jump in interest rates punctured values. Activity has been recovering slowly and hopes were high that 2026 would usher in a return to normality.
“We’re four years into a correction,” said Fergus Keane, head of central London capital markets at BNP Paribas Real Estate. “We’d bottomed out at the end of last year. We were emerging from the bottom. Now we’re going to be at the bottom for a bit longer.”
Keane, who advises on London commercial real estate including offices and retail, said some buyers such as family offices and US private equity players liked buying at the bottom, “so now there’s more time to do that . . . it’s a buyer’s market”.
Another deal that has paused is Blackstone’s £250mn sale of a Canary Wharf building known as Cargo, according to people familiar with the matter.
The FT reported in March that Blackstone had hired brokers and held early discussions for a sale of the office building. But the company has not sent out brochures marketing the property, deciding to wait for an improved environment, the people said.
Blackstone is also preparing to launch a more than £1bn sale of its British rental home provider, Leaf Living, and recently received an expression of interest in a roughly £400mn chunk of the portfolio, according to people familiar with the matter.
Blackstone declined to comment on the planned sales.
Some areas of the market are still active. Brookfield Asset Management in late March bought a portfolio of Spanish housing from Blackstone for more than €1bn.
“European real estate remains resilient despite the near‑term uncertainty, supported by solid fundamentals, highly supportive debt capital markets and growing investor demand for hard assets”, said James Seppala, Blackstone’s head of European real estate.
He added that Blackstone had since January closed or committed almost $4bn of sales across nearly 60 transactions in Europe, “meaningfully higher than the same period last year”.
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