German carmaker Daimler is starting to cash in on its real estate holdings. As part of this exercise, it just sold a large swathe of property in Frankfurt, including office space and retail outlets, to the asset management division of Swedish bank Skandinaviska Enskilda Banken (SEB).
The 19-building development known as Potsdamer Platz totals 500,000 square metres (1.6 million square feet) of floor space above and below ground. Nearly half of it is “high quality” office space, while the rest includes shops, apartments, hotels and restaurants.
Neither Daimler nor SEB disclosed financial details of the transaction, but a report in Germany’s Bild has estimated that the buildings could be worth 1.5 billion euros ($2.2 billion). The transaction is expected to be closed by the end of the first quarter of 2008.
There was mixed reaction from analysts about the sale. “I don’t think it’s a very good idea to sell it,” said Ulrich Horstmann of Bayerische Landesbank. “It’s an asset, and it’s positive to have it in the long term.”
But Michael Punzet of DZ Bank said the move fitted into Daimler’s strategy to concentrate on its carmaking business. “In the past we saw a lot of action that was not very focused on automobiles. But at the moment, a lot of the discussion is focused on cars. I think other properties will be sold.”
Daimler had said last year that it may sell up to 4 billion euros ($5.8 billion) worth of properties, including the Potsdamer Platz development and the former company headquarters in Stuttgart-Moehringen.
Daimler also has a 7.5 per cent stake in the European Aeronautic Defence and Space Company, which it has already pared down. But Punzet said he doubted that the company would reduce that holding until around 2010, and that Daimler would instead focus on divesting its properties.