Supermarkt - Big Box Store
To some extent, Aldi is making a virtue out of necessity. Building permits for city-wide retail projects are increasingly being tied by the authorities, in Berlin and elsewhere, to commitments made by businesses to foster denser living quarters and hybrid usage of existing buildings.
The cooperative Dutch pension fund service provider PGGM and AG Real Estate, part of Belgian insurance group AG, have teamed up to buy a €350m German retail portolio in a deal managed by UK group Rockspring, which will also be a partner in the tripartite deal on behalf of its German Retail Box Fund. The seller was Capital & Regional and global wealth manager Ares Management. This is the largest deal of its type in Germany for the last five years.
The portfolio is located 92% in western Germany, and consists of 23 large, grocery-anchored big box retail parks with 275,000 sqm. total gross lettable area, generating an annual rent roll of €28m. Metro Group, the owner of the Real hypermarket brand, Rewe, Kaufland, Edeka and Globus are the major tenants; portfolio occupancy is at 98%, with a weighted average unexpired lease term of 6.9 years. The transaction brings Rockspring’s assets under management in German and Swiss retail warehousing to over €1.5bn, and to €7.2bn its total assets across Europe.
More significantly, however, together with existing ownerships, the transaction extends Rockspring’s relationship with Real, Germany’s biggest out-of-town food retailer which operates across seven of the 23 assets, and makes Rockspring one of its principal partners and store owners. The properties will be managed by Prime Management, which, together with Rockspring, has a successful track record in implementing redevelopment projects and lease re-gearing with Real.
According to Rockspring partner Paul Hampton, “This is a significant transaction for Rockspring, both in terms of its size and our success in bringing two of Europe’s largest and most experienced investors in a club deal together alongside our own German Retail Box Fund.”
The deal is also significant for the Dutch and Belgian investors as they establish a foothold in the German market, although PGGM has dones several deals with Rockspring in the past. Thijs van Gelder, senior investment manager at PGGM commented: “This is an attractive, value add portfolio with longevity, a stable cash flow and, importantly, with defined actions to improve the portfolio’s sustainability performance.” PGGM is a cooperative Dutch pension fund service provider, offering asset management, pension fund management, policy ad- vice and management support. It has 678,000 members and €180bn in assets under management.
Serge Fautré, CEO of the Belgian group AG Real Estate, added: “This, our first retail real estate investment in Germany, comes in addition to our current activities in car park management in Germany (Interparking via Contipark) and is in line with our ambition to engage ourselves into new markets in a highly selective way.” AG Real Estate has a staff of 200 and is active in asset and property management, development, construction management, PPP, real estate finance and car park management (where it employs a further 2,300 across Europe). It also manages an investment portfolio valued at €5.3bn
Meanwhile, Rockspring has been active on its own behalf as well after buying two prominent eastern German retail assets earlier this year for €64.5m.
The first asset, the Elisen Retail Park in Greifwald on the north-east Baltic coast, has 44,000 sqm of gross lettable area and is fully leased to the Metro group. Anchor tenants include grocer Real, electronics store Media Markt and home improvement store OBI. In Frankfurt an der Oder, on the Polish border, Rockspring will be adding the Real hypermarket to its Trans European V Funds, which now has €150m of assets. The price paid was €925 per sqm, representing a net initial yield of 12.6%.
According to Rockspring partner Stuart Reid, “The relationship that we were able to form with the sellers of this off market portfolio in such a competitive market place combined with the quality of equity supporting our offer was instrumental in securing this acquisition.Both acquisitions are in excellent locations. Greifswald is the dominant centre in a major catchment area of 150,000 people and growing, while the Frankfurt property offers upside potential through improved asset management. These transactions mark another major strategic investment in dominant retail warehouses, supported by increasing institutional appetite for investing in the east of the country.”
