Hamburg-based DIFA Deutsche Immobilien Fonds AG is the first German fund management company to complete a cross-border deal in Latin America â" a region previously neglected by European property investors. For its open-ended real estate fund DIFA-Global, DIFA has acquired a 30 per cent share in Torre Mayor, a 55-storey office tower in the Mexican capital's bustling Central Business District, for some 102 million US dollars.
Torre Mayor, 55-storey office tower in the Mexican capital's bustling Central Business District
"This investment proves that open-ended real estate funds are able to play an active role in emerging markets worldwide and not just in Central or Eastern Europe," states DIFA board member Dr. Reinhard Kutscher. This Union Investment Group company has been investing overseas through its DIFA-GRUND fund since 1985, and the DIFA funds now have interests in seven properties in the Americas.
To complete this transaction, DIFA entered a strategic partnership with the driving force behind the project, Canadian developer Reichmann International, who will retain responsibility for property management and further lettings. At 225 meters high, Torre Mayor is the tallest building in Latin America. Reichmann is also known for other high-caliber properties like London's Canary Wharf, the World Financial Center in New York and the First Canadian Place office tower in Toronto.
With its striking glass curve, Torre Mayor is one of the continent's most architecturally exciting and technically outstanding buildings. The elegant skyscraper, completed in 2003 by Reichmann International, offers around 74,000 square meters of state-of-the-art office space for international companies in the financial services, accountancy and computing sectors. There is also a retail area covering approximately 3,000 square meters across the first two stories. With the total occupancy rate currently standing at 60 per cent, major tenants with long-term leases include Deloitte, the insurance services firm Marsh, plus Hewlett Packard. "The building's prominent location right on the Paseo de la Reforma, Mexico City's main thoroughfare, ensures excellent transport links. Coupled with high standards - including the latest technologies for earthquake protection - there is potential for attractive value growth, especially once the property is fully let as anticipated," adds Kutscher. "Irrespective of occupancy levels, we will receive a guaranteed minimum return on our investment during the initial years."
Mexico City: a dynamic growth market
Home to the Torre Mayor, Reforma is one of Mexico City's main commercial districts and comprises 218,000 square meters of office space at the heart of the capital. "The office market in Mexico City experienced a real explosion of transactions during the first half of 2004 as businesses rediscovered the location. The financial industry in particular has adopted Reforma with its wide avenues and boulevards as an upmarket address," says Kutscher. In 2004, Mexico City saw a record 430,000 square meters of space change hands against a backdrop of strong economic growth that reached 4.4 per cent. "Dynamic development of the office market in Mexico City has generated increased interest among US and domestic pension funds," continues Kutscher. "Due to rising demand, which is also being supported by the launch of Real Estate Investment Trusts, initial returns within Mexico City can be expected to fall."
Strategic Asia partnership with ING Real Estate
DIFA-Global was set up on 1 April 2004 and currently comprises assets of some 533 million euros. One year after inception, the fund has holdings in Germany, France, the UK, Czech Republic, USA and Mexico. Over the medium term DIFA-Global is set to make 50 per cent of its real estate investments outside Europe. "Our investment strategy for this fund aims to exploit the
different market cycles at global level," says Kutscher. "We are currently examining investment opportunities in Singapore, Japan and Korea, as well as in North and Latin America