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Union Investment forward funds pre-let Munich asset

Union Investment has acquired a development project in Munich’s Werksviertel district from Pandion in a forward funding deal. The project is close to Project East, which Union acquired earlier this year in a joint venture with Hines.

Alejandro Obermeyer.

Construction of the office building, which will provide around 1,500 workplaces, will start in January 2022. In the summer, the building was pre-let for 15 years to the Bundesanstalt für Immobilienaufgaben for use by the German Patent and Trade Mark Office.

Described as a perimeter block development with two transverse wings, the seven-storey project will provide a total of 44,700 sq m of lettable office space and 3,180 sq m of underground storage.

Half of the acquisition is made for the special real estate fund UII German Prime Select and half for UII MSI ges. InvKG, which is managed by Union Investment on behalf of the Bayerische Versorgungskammer.

The purchase price was not disclosed but according to German news source Thomas Daily the figure is about €600 million.

“Munich is Germany’s most stable office market and the Werksviertel is currently one of the city’s most sought-after submarkets,” said Alejandro Obermeyer, head of Investment Management DACH at Union Investment.

“There is limited space available and office vacancies in this submarket are running at just 0.5%. Many development projects have a correspondingly high pre-letting rate.”