Oxford Properties Group (“Oxford”), a leading global real estate investor, asset manager and business builder, announces the formation of a 50:50 joint venture with Norges Bank Investment Management (“NBIM”) at the iconic Sony Center in Berlin. NBIM will pay US$717 million (€677 million) to acquire a 50% ownership interest in the Sony Center with Oxford selling 44.9% of its existing stake and Madison International Realty disposing its entire 5.1% interest.
Oxford will retain a 50% interest in the property and act as asset manager on behalf of the new joint venture. The closing of the transaction, which values the property at US$1.43 billion (€1.35 billion), is subject to regulatory approval.
Comprising 1.22 million sq ft of prime office, retail and residential space in the heart of Berlin, the Sony Center stands as a modern landmark and attracts more than 7 million visitors annually. An example of the depth of demand for well let, high-quality office product among global institutional investors, the deal sees Oxford crystallise value created via its asset management activities since acquiring the property in 2017.
In Q4 2021, Oxford announced a US$212 million (€200 million) master-planned redevelopment of the Sony Center to futureproof the campus with leading-edge design and sustainability features. The transformative vision for the site has been supported by strong leasing momentum. In April, restaurant, bar and lounge hotspot Frederick’s opened after the leasing of Sony Center’s flagship restaurant and events space to Rhubarb Hospitality. Anchor office occupier Deutsche Bahn has also signed a long-term renewal.
Abby Shapiro, Senior Vice President & Head of Office, Retail and Life Sciences, Europe at Oxford Properties, commented: “Today’s announcement further expands our relationship with NBIM, a highly strategic and like-minded partner, which shares our long-term conviction in Berlin. Furthermore, it demonstrates the belief in our investment thesis that sustainable and wellness-focused office buildings in prime locations, serviced by superb food and retail amenities, will continue to outperform.
“Having realized significant value, we will reinvest back into Sony Centre to improve the customer experience. We continue to have a favourable long-term view in Germany and are actively looking to grow our business in the country, particularly in the German logistics market.”
As part of its planned growth in Germany, earlier this year Oxford acquired an 1.53 million sq ft urban logistics portfolio of 10 assets located across six German states.
Diana Shieh, Co-Head of Portfolio and Asset Management, Managing Director for Madison International Realty, commented: “Sony Center is one of the most recognizable assets in Berlin, and Madison has experienced a transformation of the estate throughout its long-time partnership with Oxford Properties since 2017. Having executed our business plan, which included the creation of a masterplan for the future, we are pleased to crystallize our stake through this recapitalization and look forward to seeing this campus reach its full potential over the coming years.”
Jay Drexler, Vice President Office, Retail & Life Science Europe, at Oxford Properties, added: “Our partnership with NBIM serves as further validation of our ambitious master-planned vision for the Sony Center. It will bring better quality, more sustainable and flexible workspaces, coupled with new amenities that include safe and secure bike parking to promote a healthy commute, fitness facilities and services dedicated to well-being. We also continue to strengthen the cultural and culinary offering at Sony Centre through public art activations, community partnerships and a wide-spectrum of food and beverage concepts at a variety of price points to ensure that all can share in the experience.”
Oxford’s US$212 million (€200 million) redevelopment plan aims to place a greater focus on human-centric aspects of the campus including optimising workplaces for health and wellbeing, world-class retail and future-focused amenities. This will be complemented by an annual programme of events in sport, culture and entertainment that will be accessible not only for the Sony Center office community, but also for Berliners and visitors. Major construction activity has begun, with the majority of the redevelopment expected to complete by the end of 2023.
In total, around 538,000 sq ft of office space will be upgraded, becoming workplaces of the future. While the expanded food and beverage offering will feature Berlin providers as well as global restaurateurs. A new three-floor food hall from London food incubator KERB will showcase and develop the very best of the Berlin independent food and drink scene, further underlining the Sony Center’s reputation as a hub for exchange and community.