CBRE has won the mandate to sell Signa’s unfinished Elbtower in Hamburg, said two sources familiar with the situation, speaking on the condition of anonymity.
The insolvency administrator appointed CBRE, following a pitch in which several brokerage firms took part. The pitch was a difficult one as there are many moving parts, said the first source. Putting a valuation on the project was impossible, he added. Instead, brokers presented various scenarios and stressed their capabilities. Given the size and the different stakeholders a straightforward sale could prove difficult.
The special purpose vehicle of the project entered into administration last month, as reported. The biggest question is what the City of Hamburg will do. Although it has a repurchase right, it has said it favours a private solution. The other factors are the lenders and minority owners of the project. Insurer Signal Iduna provided a €50 million loan secured against the plot of land. Commerz Real invested €50 million of equity via its hausinvest fund, Signa Prime Selection provided €275 million equity and billionaire Klaus-Michael Kühne owns an indirect stake of 10%.
Commerz Real chief executive Henning Koch has been quoted in German media as saying that another €500 million to €600 million of debt would be needed to complete the project.
Time is of the essence. First, the unfinished project is exposed to the elements. Construction work was halted when only 100 metres of the 245-metre tall tower had been built. The material will decay the longer it takes to resume construction.
Second, prospective tenants have become impatient. Hamburg Commercial Bank has cancelled an agreement to take space in the new tower, it said in a statement. It was to be the biggest tenant, agreeing to let 11,000 square metres with an option to occupy another 2,000 square metres. The bank sold its current headquarters for a reported €220 million to Signa. Market observers said this was a good price. In return, the bank had agreed to pay a rent of €45 per square metre a month in the Elbtower, considerably higher than current prime rents in the city. At the end of last year, prime office rents stood at €34.50 per square metre a month, according to JLL.
The parent company Signa Holding in Austria filed for insolvency in November in what was the biggest corporate insolvency in the country's history. Signa was hit by rising interest rate and a stalling property market.
CBRE and the insolvency administrator did not respond to a request for comment by the time of publication.
(Updated on 22 February to reflect that Hamburg Commercial Bank has cancelled its lease agreement for the Elbtower.)