DIFA Buys 30% of Torre Mayor for $102M

MEXICO CITY-Deutsche Immobilien Fonds AG has acquired a 30% interest in the 800,000-sf Torre Mayor office tower here for $102 million. In completing the transaction, Hamburg-based DIFA becomes the German fund management company to complete a cross-border deal in Latin America.At 738 feet high, Torre Mayor is the tallest building in Latin America. The interest was sold by the building’s Canada-based developer Reichmann International, which will continue to manage and lease the property. DIFA acquired the interest for its open-ended real estate fund DIFA-Global.Located on Paseo de la Reforma, Mexico City’s main thoroughfare, the 55-story building has 768,000 sf of office space and 32,000 sf of retail space. The total occupancy rate is about 60%. Major tenants with long-term leases include Deloitte, the insurance services firm Marsh, and Hewlett Packard. Cushman & Wakefield has had the leasing assignment for the past year.”There is potential for attractive value growth, especially once the property is fully let as anticipated,” says DIFA board member Dr. Reinhard Kutscher. “Irrespective of occupancy levels, we will receive a guaranteed minimum return on our investment during the initial years.”In 2004, Mexico City saw 4.4% growth in its economy, prompting a record 4.6 million sf of space the change hands. “Dynamic development of the office market in Mexico City has generated increased interest among US and domestic pension funds,” says 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.”DIFA-Global was set up this time last year and now comprises assets of about $689 million. 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% 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.” To support its upcoming entry into the Asian market, DIFA recently signed a strategic agreement with ING Real Estate. Meanwhile, experienced partner Metzler North America has already provided consultancy services on substantial real estate investments in the US.