CapitaLand Commercial Trust marks European debut with planned acquisition of Frankfurt property

It is set to buy ‘Gallileo’ for $569.6m by June.

CapitaLand Commercial Trust (CCT) is acquiring Gallileo, a freehold Grade A commercial property located in Frankfurt, Germany for an agreed property value of $569.6m (€356m), representing the REIT’s first European foray. 

CCT will hold a 94.9% stake whilst CapitaLand will hold the remaining 5.1% stake in the Gallileo property through a special purpose vehicle.

“Expanding overseas is a strategic move to deliver long-term sustainable distribution growth to our unitholders and inject diversity to the portfolio,” said Kevin Chee, CEO of the manager of CCT. “We have been actively exploring opportunities to acquire core assets in key gateway cities in developed markets. Germany is a key focus for CCT given the depth of good quality investment grade commercial assets.

The acquisition is expected to boost CCT portfolio from $10.4b to $10.9b following a 5% exposure to Germany’s thriving commercial property market. Chee similarly expects distribution per unit (DPU) to rise 1.4% from 2.12 cents to 2.15 cents on a pro forma basis.

Also read: CapitaLand Commercial Trust NPI up 10.5% to $77.2m in Q1

“Leveraging the Group’s 15 years of experience in Germany, the acquisition of Gallileo is in line with CapitaLand’s strategy of growing its platforms and increasing its holdings of well-located assets in developed markets outside of Asia,” said Gerald Yong, deputy chief investment officer of CapitaLand Limited and Head of CapitaLand International.

The completion of the acquisition is expected to take place in June.