Florian Glock - REFIRE
Stuart Reid - Rockspring
According to Stuart Reid, partner at Rockspring with responsibility for Germany, “Following detailed research into the former East Germany a number of years ago, we identified the cities that were most likely to benefit from socio-economic growth and the retail schemes with the most potential within these cities."
In a significant off-market retail deal just announced this week, Rockspring Property Investment Managers bought one of the largest shopping centres in Magdeburg, in the state of Saxony Anhalt, for €117m from Chenavari.
The Flora Park centre comprises 66,500 sq m of retail space across 90 units and has 2,700 car parking spaces. It is anchored by a 12,000 sqm Real hypermarket, a 16,000 sqm Roller furniture store and a 2,400 sqm TK Maxx, while other tenants include Medimax, C&A, Deichmann and Aldi.
The centre, which was originally constructed in 1992, is currently undergoing a full refurbishment which was started by Chenavari and will be completed by Rockspring in 2017, for a further total capex of about €25m. The refurbishment will be managed by Rockspring’s Berlin office, which also originated the transaction and will co-ordinate the final lettings on completion of the improvement works. Asset manager Estama handled the sale on behalf of Chenavari.
Rockspring will allocate the asset to its TransEuropean Property Limited Partnership VI (TEP VI) fund, the largest of its TransEuropean series of funds which had its first close in October 2015 with €218m in commitments for five of its investors from across the UK, France, Finland and the US. Since then TEP VI held a final close in July 2016 and with €430 million of equity as well as leverage of up to 55%, it has a total expected firepower of €1.0 billion. To date, the fund has committed in excess of €680m across nine projects throughout Europe.
The fund has a diversified pan-European investment programme with a focus on office, retail, residential and industrial properties in large metropolitan areas of core Western Europe (including the UK).
Rocksprings's TEP VI followed TEP V, which closed in 2012 with over €350 million of commitments from 12 investors, and has since delivered a 21.5% annual return. The TransEuropean series of funds were first launched in 1992 and have invested €1.7 billion in 14 European countries since inception, achieving a 13.1% annual IRR.
According to Stuart Reid, partner at Rockspring with responsibility for Germany, “Following detailed research into the former East Germany a number of years ago, we identified the cities that were most likely to benefit from socio-economic growth and the retail schemes with the most potential within these cities. Over the last five years we have had the opportunity to acquire assets in the better performing locations in cities which are now benefitting from this economic and population growth. We are pleased to have added Flora Park to our portfolio and to have the opportunity to complete the repositioning.”
Christian Bodtke, investment executive at Estama, says: “Flora Park is a dominant shopping-centre in the local market of Magdeburg. Interest in the property was expectedly high given the current market situation with record demand for this type of product. With Rockspring we found a partner that understood the value of this asset and had the competence to take over an ongoing refurbishment programme commenced by our client.”
Flora Park is the 10th shopping centre that Rockspring has acquired on behalf of its portfolio of funds in the former East Germany since 2011, bringing its total investment in the region to around €440 million. Rockspring now has over €2 billion of assets under management across Germany and Switzerland, including about 100 retail properties.
