News from 09/22/2008
Immoeast: Projects worth billions shelved
After massive drops in its stock price, Immoeast Immobilien AG, Vienna, has pulled the emergency brake and is for the time being shelving projects worth billions. The firm reported that existing projects with outstanding construction costs of approximately €4.4bn are to be trimmed by at least €2.0bn. For the foreseeable future, no new construction phases are to be started. Projects in the planning stage are to be pursued only up to the point where they are ripe for building. In individual cases, projects may also be canceled. This applies to all regions, but particularly to projects in Romania. Among the measures with which Immoeast wants to “secure lasting liquidity” is the sale of individual existing objects. According to the announcement, properties valued at some €400mn are under concrete negotiation.
Berlin: Haus Cumberland to become office location
Haus Cumberland on will probably not become a hotel. According to a report in the daily newspaper Berliner Morgenpost, Orco Germany is now going to develop the landmarked building complex – which has been vacant for years – into an office building with 20,000 sqm of office and nearly 9,000 sqm of retail space. Market research has shown that a hotel would not be economically feasible, the paper quotes Orco spokesperson Sabrina Eilers. On the other hand, she said, demand already exists for office and shop areas. Commencement of construction is slated for 2009.
Kaufhof: Metro starts looking for a buyer for department stores
The Metro Group based in Düsseldorf has now launched its effort to sell the business and the properties of its department store subsidiary Kaufhof. A spokesperson for the concern told the daily newspaper Handelsblatt, “We have commissioned the U.S. banking house JP Morgan to look for a buyer for Kaufhof.” According to the daily newspaper Financial Times Deutschland, information packets have already been sent to strategic and financial investors, and concrete dialog with them has already begun; however, a formal sales process has not yet been initiated. The price targeted by Metro for the total Kaufhof package is quoted at €3bn - €1bn for the operative business and €2bn for the real estate. Financial investors such as BC Partners and KKR, as well as the investor Clemens Vedder, are considered to be possible principal bidders.
Financial Crisis: German politicians criticize U.S.A.
German finance ministry politicians are viewing the U.S. government’s $700bn rescue package for the harried financial markets with skepticism. U.S. Secretary of the Treasury Henry Paulson’s appeal to other governments to initiate similar bailout measures has met with limited enthusiasm here: “We have a more stable banking system in Germany,” a spokesman of Federal Finance Minister Peer Steinbrück declared. Meanwhile, Chancellor Angela Merkel blamed the U.S. government, among others, for the financial crisis, saying that it failed to support international efforts to limit risk involved in issuing and trading loans. Germany, she continued, introduced Basle II back in 2007, but the U.S.A. rejected implementing the regulations for a long time. Michael Meister (CDU), vice-chairman of the Christian Democratic Union faction in the German parliament, expressed doubts concerning the probable success of Paulson’s gigantic bailout fund, explaining that the U.S. government might possibly be laying the groundwork for the next crisis by heightening the national debt and thereby increasing pressure on the dollar. He added that it remained open for discussion whether or not the main reason for the current crisis was interest reductions following the attacks on September 11, 2001.
Stuttgart: Stuttgart 21 apartment construction to begin in 2009
Construction of the first apartments in the Stuttgart 21 project at Stuttgart central station has been scheduled to begin during the second quarter of 2009. The winners of the design competition conducted by Munich-based property developer Reiß & Co. Real Estate for the residential and office project on parcel A1.13 in the Europaviertel quarter have now been determined: the 250 two-room to five-room apartments with a total of 23,500 sqm of gross floor area will be built according to the design drafted by Maier Neuberger Projekte and the office wing with 6,300 sqm of gross floor area will be erected on the basis of plans drawn by KSP Engel Zimmermann. According to the daily newspaper Stuttgarter Nachrichten, the investment volume for the “Pariser Höfe” (“Parisian Courtyards”), being developed on Pariser Platz, is €85mn. 32 Group GmbH is participating as a co-investor, together with Reiß. The first tenants should be able to occupy the new building by the end of 2010. The paper said that rent for the apartments will probably range between €12 and €13/sqm and rent for the offices between €16 and €17/sqm.
Stuttgart: Project launched for business park
With the renaming of the former SEL location on Lorenzstrasse in the Zuffenhausen district of Stuttgart to XCEL-BusinessCampus on Porscheplatz, the next round in the revitalization of the industrial area has been launched. Approximately 20,000 sqm of office and 25,000 sqm of logistics and industrial space are already available on the project area, which is 16 of a total of 25 hectares. According to project developer Freo Financial & Real Estate Operations GmbH, these areas can be supplemented with a further 20,000 sqm of office space and 40,000 sqm of logistics and industrial space in new buildings. Moreover, a hotel with 200 rooms on seven floors, retail, gastronomy, and so on is planned in the immediate vicinity of the sports car manufacturer Porsche. The daily newspaper Stuttgarter Zeitung reported that the investment volume runs to some €200mn. Freo was commissioned with development and marketing by Deltona Real Estate GmbH & Co. KG, which acquired the entire premises in 2005. Apart from Porsche, SEL’s successor, Alcatel-Lucent, and Thales Holding are already occupants of the area.