01.
Background
A 35,000 m² (377,000 sqf) office building in a good location in one of Germany’s Top 5 office markets with outdated technical equipment and significant vacancy. The main tenant had a few years left on his lease term and was unhappy, leading to a significant net operating income (“NOI”) risk.
02.
Approach
The extension of the main tenant‘s lease term was a prerequisite for the renewal of the technical equipment of the building.
In addition, upgrading the building through
- Creation of a modern entrance area incl. lobby,
- Optimization of the existing retail tenant mix through lease terminations and new lettings as well as the creation of additional retail space,
- LEED Gold certification and
- New marketing concept to boost occupancy
03.
Outcome
Extension of the main tenant‘s lease term by 15 years. Creation of additional 900 m² of retail space by covering two atriums and leasing it to top tenants (including dm and Sixt) with terms of 10+ years. Full lease-up of the 15% office vacancy.
Overall, a 60% increase in property’s net asset value (“NAV”) was achieved.
