Summit Germany commits £20m on Frankfurt complex

Summit Germany revealed a significant suburban investment on Monday, committing €25.5m (£19.66m) to the purchase of an office complex in Oberursel.

The AIM-traded German commercial property and investment firm described Oberursel as a prosperous suburb of Frankfurt, and said the complex had 18,000 square metres (193,750 square feet) of lettable area on around 19,000 square metres of land.

The properties were fully let to a Germany-listed construction company, it confirmed, with around 60% of the complex used as its headquarters and the remainder sublet to other tenants.

"We are very excited with this acquisition which is in line with our strategy," said managing director Zohar Levy.

"It has an attractive location, excellent yield with a stable long-term income and a tremendous upside potential from further residential development and the potential conversion of office spaces," he added.

Following a preliminary assessment, the company said there was an opportunity to build a residential development on the existing plot and convert part of the office space into residential units when they were vacated, creating further upside from the purchase.

Summit Germany said it was initially financing the acquisition with cash initially, and was entering into discussions with German lenders to refinance the property at a later stage. Closing was expected to occur within weeks.

The company's board confirmed the aggregate net rent on the property was €1.8m, reflecting a net operating income yield of 7% on the acquisition cost. The weighted average lease length was 11.4 years, it said.