Adler/Aggregate - Site Visits
All,
Please refer to our unchanged analysis here.
We have been stalking about the construction site in the centre of (West) Berlin, situated prominently on the city’s biggest shopping mile. It turns out that it’s replacing the former offices of KPMG, where I started in 1998.
The park house on Uhlandstraße has been finished (maintained the existing substance from an earlier building) and a supermarket occupies most of the retail space at the bottom. The high rise still needs refurbishment and at the centre is still a big hole in the ground. The buildings facing the main shopping street have not yet been commenced.
Because we are not real estate investors, we don’t find it easy to determine the exact book value of such a site, but we do have a few thoughts: First of all, the site is busy, within the context of a recently changed owner and within our expectations. The location is top and we have no doubts that when finished, the units will sell/rent for top Euros.
A discounted future value approach feels somewhat steep to us, because it is a one-off development where more things can go wrong (compared to QH below). However, valuing the project only at expense incurred so far may not fully do it credit either.
So in sum, our visit did not confirm that the valuation chosen may be incorrect or would have to be adjusted.
Happy to discuss or describe further,
Wolfgang.
Fuerst Berlin
Above Images show the view from Kurfürstendamm. The front facing the main shopping street has not yet been built, giving a view to a vast hole in the ground at the centre of the development as well as the not yet refurbished high-rise.
View from Uhlandstraße with the completed (refurbished) park house and retail units.
Quartier Heidestrasse
Above images show QH from South (where it is substantially completed) to North (where it isn’t).
The site is very busy and construction is in full swing. Blocks have a cosmetically different look but are ultimately designed in the same way. Consistently the same construction companies are moving along the street from one block to the next to install their part of what looks like one consistent development plan.
The mood on the site is good.
Above videos 1 and 2 show the length of Heiderstraße. The concrete structures have been for the most part fully erected and companies installing plumbing, electricity, etc are moving from one block to the next, where the first blocks have already been largely finished, while the last are still raw concrete skeletons.
QH is a case of mass construction where costs and experiences from completing one block can quite confidently be extrapolated to the others as the builders successively move down the street. This means that we are entirely comfortable with a discounted value approach here. The cost to complete as well as final value of this development should be calculable to within a very narrow bandwidth.
QH is not a top location. It is very central in Berlin, but as the last vide shows, it is part of an entirely new-built area that is admittedly designed to achieve a lower m2 price than Fürst for instance.