News from 09/01/2008
Commerzbank/Dresdner Bank: Merger to eliminate 6,500 jobs in Germany
The sale of Dresdner Bank to Commerzbank announced on Sunday is to result in job cuts affecting 9,000 of the total of 63,000 employees, 6,500 of them in Germany, the firm declared. Together, the two institutions operate 1,894 branches, which are to be reduced to approximately 1,200 by 2012. Some 70% of the jobs involved are in the back office, controlling and production units, as well as the investment banking segment. This is going to have repercussions for the German office markets, especially in Frankfurt. In the intermediate term, the loss of 10,000 jobs would mean vacating 300,000 sqm – evenly split between branches and headquarters, DB Researcher Martin Praum estimated in anticipation of the merger according to the daily newspaper Financial Times Deutschland. Eurocastle, the Fortress subsidiary specializing in German commercial properties and loans, would probably be hardest hit by Dresdner Bank space cutbacks. Eurocastle took over a portfolio with 303 Dresdner Bank properties in 2005 for approximately €2bn; the areas sold were rented back with three- to 15-year leases.
Closed-end funds: Business climate index drops – Germany back in focus
During the first half of 2008, the business climate index for closed-end funds slipped back to the lowest level in five years. The business climate index is compiled semi-annually by the Scope Group (Berlin), which conducts the poll among initiators and brokers. According to Scope, the brokers have been especially disappointed, with 16% of them feeling that the situation is poor or unsatisfactory. For the first half of 2007, this level was at only 7%. Among initiators, the portion of those polled who evaluate the market situation as unsatisfactory rose from 2% during the first half of 2007 to 13% at the present time. Enterprises that were polled see, among the reasons for the subdued atmosphere, not only the insecurity concerning the market situation, but also the high level of the price of entry, general difficulty in finding suitable objects, and the current interest level. The poll also investigated the investment plans of property fund investors and revealed that Germany is back in the limelight. Moreover, it indicated that in the course of the coming two years, reduced prices on the office markets in the U.S.A. and Great Britain will be used to get back into the markets there. Half the brokers polled see Asia as the target geographical real estate market of the near future, par excellence.
Atrium European Real Estate: Profits plunge during first half year
Atrium European Real Estate, called Meinl European Land until recently, reported a net operating loss of €2.8mn for the first half of 2008 (H1, 2007: profit of €105.3mn). The management attributed the setback to valuation of the portfolio, which, “according to IFRS guidelines, has its effect on profit and loss calculations.” Net profits shrank from €114.4mn to €8mn. The board nevertheless remains confident that the modifications already performed, together with those planned, will bring the firm “into an excellent position to ride out the storm and generate long-term growth.” At the beginning of August, the Israeli-American joint venture between Gazit and CPI took over the company from Meinl-Bank.
Stuttgart region: Metzingen stops settlement of Boss logistics center
The inhabitants of the Swabian town of Metzingen (in Reutlingen County) have spoken out against allowing a logistics center planned by the fashions concern Hugo Boss. In a referendum on Sunday, a 61.2% majority voted in favor of bringing the land-use planning procedure to a halt. The firm wanted to develop a 300 m long, 180 m wide and 20 m tall high-rack warehouse in the Braike-Wangen commercial area. Metzingen’s mayor Dieter Hauswirth resigned on Sunday evening, declaring that the decision against the Boss settlement is also a decision against his policy. It is now seen as probable that Hugo Boss will build its distribution warehouse in nearby Nürtingen (Esslingen County), where the concern started parallel planning for a logistics center when the resistance of the citizens of Metzingen began to take shape. A proposed referendum for the citizens of Nürtingen was rejected by the city council.
Passau: €130mn ECE Stadtgalerie about to open
In central Passau, on September 10, the new shopping center called “Stadtgalerie” is going to open. The project partners, ECE Projektmanagement and Deutsche Euroshop, invested approximately €130mn in the new building on the area of a former locomotive shed. Bilfinger Berger acted as the general contractor. The design was drafted by the architectural office Auer+Weber. The center has some 21,000 sqm of sales area for 90 stores on three floors, as well as 500 parking spaces. The following chains are anchor tenants: Douglas, Pimkie, Orsay, Cecil, Bonita, Deichmann, C&A, Palmers, Jack Wolfskin and dm drugstores.
Fay Projects: Headquarters moves from Mannheim to Frankfurt
In mid-October, the developer Fay Projects GmbH, based in Mannheim, will move its headquarters to Frankfurt. “If we want to go on growing, we have to go away from here,” CEO Andreas-Norbert Fay told the daily newspaper Mannheimer Morgen. It is the firm’s goal, he continued, to develop projects with a volume of at least €50mn. Quoting circles close to the company, the paper reported that the move also has to do with the allocation of contracts by the city of Mannheim: during the past 17 years, Fay was not commissioned to carry out one single large-scale project in Mannheim. At present, among other projects, the firm is working on the urban development project “Stuttgart 21,” where the “Library Square” mixed-use project, at approximately 18,700 sqm of gross floor space, is being developed on one of the construction sites.