The deal in plain terms
Polus Capital Management is lining up to buy a slice of the debt secured on the MesseTurm, Germany's second tallest tower and a fixture of Frankfurt's skyline. People with knowledge said Polus is close to taking roughly €50 million, about $56 million, from the approximately €300 million loan on the building.
Spokespeople for Polus and HCOB did not comment.
Why the debt is trading
This credit sits inside a portfolio of German property loans that Polus and partners are buying at a blended discount between 30% and 40%, the people said. Blackstone and its lenders have evaluated different courses for the asset - among them a sale - and expect that a formal, orderly process would bring bids of roughly €250 million.
Blackstone paid €250 million for the 63 story tower in 2014 during the zero rate boom. Since borrowing costs jumped in 2022, Frankfurt office values have fallen, and buyers have demanded lower entry prices and higher yields to commit capital.
Extensions and operations
The lending consortium extended the loan in 2024, when Blackstone wrote off its remaining equity, according to people familiar. Earlier this month, the lenders granted another extension to November 2029 to buy time to lease vacant space and work on the valuation.
Blackstone said in an emailed statement: "We prudently wrote our equity investment down to zero some time ago, given the well-documented headwinds facing the German office market." It added: "The loan maturity has been extended following agreement by all lenders that the best path to maximize recovery is for OfficeFirst to continue managing the asset and executing the business plan." OfficeFirst continues to run the property on behalf of the lenders, who are funding upkeep and leasing efforts, the people said.
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Tenants and occupancy
The MesseTurm sits by Frankfurt's trade fair grounds and now hosts the headquarters of the European Union's money laundering agency, AMLA, after it agreed to lease space last year. Last month, Blackstone finalized another lease with the European Insurance and Occupational Pensions Authority. Together, those deals cover about 135,000 square feet, or 12,500 square meters.
According to the people, about 85% of the offices are under lease. Tata Consultancy Services is among the other occupants.
The bottom line for investors
German commercial property stress is creating entry points for credit buyers taking discounted paper, while banks such as HCOB "actively rebalanc[e]" their real estate books by running down international exposure, being selective on new business, and selling non performing loans in a targeted way. If leasing keeps improving and values stabilize into 2029, recoveries are most likely to accrue in the debt stack rather than the written down equity.
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