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€775M tower sale signifies Brexit effect on Frankfurt's property market

The recent €775 million sale of Tower 185, Frankfurt's largest office building, reflects how the city's property market has been buoyed by Brexit, London's Financial Times reported Nov. 30.

The tower, built in 2011 in a €480 million project, sold for roughly 125% higher than its 2016-end book value, the publication noted, citing CA Immobilien Anlagen AG, which sold the property along with its joint venture partners.

The buyer, Deka Immobilien GmbH, outbid a number of international suitors for one of the largest real estate deals of 2017 in continental Europe.

CA Immobilien's head of investment management, Michael Morgan, told FT that the sale was "hotly contested." The company, which placed the asset up for sale in May, owned a 33% stake in the tower after selling a 67% interest to pension fund WPI Fonds SCS-Fis. The pension fund also sold its stake to Deka Immobilien.

Brexit has ushered in an increase in building activity in Frankfurt with four office towers under construction that will deliver up to 300,000 square meters of space by 2020, the FT said.

U.S. investment banks Goldman Sachs and Morgan Stanley have already leased space in two of the towers. The report also noted that 15 global banks have indicated so far that they will move some operations to Frankfurt from London ahead of the U.K.'s planned exit from the EU in 2019.