Canada's Slate marks European debut with German retail buy

The Toronto-based REIT Slate Asset Management has made its first foray into European real estate, buying 67 mainly grocery-anchored real estate assets located throughout Germany.

The retail properties are the Belfry and Truss portfolios from the Euronext-listed Eurocastle group of closed-end funds, with 136,000 sqm of gross lettable space, which had been valued at end-June by Eurocastle at €128m.

According to Blair Welch, senior partner and co-founder of Slate, "We have been monitoring acquisition opportunities in Europe, in particular Germany, for over two years. The current economic landscape provides a compelling opportunity to acquire high-quality assets that can be financed on good terms. This acquisition provides an attractive entry point into Europe for Slate and we continue to actively monitor opportunities to expand our European presence."

Slate said in a statement that the 67 properties were primarily located on main traffic thoroughfares with high local visibility, typical of the classic German Fachmarktzentrum. The majority of the tenant are among Germany's biggest retailers, including Lidl, Aldi, Edeka and REWE. Recent arrival Avison Young acted for Slate in brokering the deal, while Savills acted for Eurocastle.

There had been speculation last year in Germany that the Augsburg-based Patrizia Immobilien was interested in buying the two Eurocastle portfolios. They had earlier in the year bought another Eurocastle portfolio with 107 separate assets, but they subsequently ceased to pursue the Belfry and Truss packages. The Eurocastle LTV's on the two portfolios were 106% and 129% respectively, according to Eurocastle, and with such high leverage the company said it is likely to have earned a mere €2.3m on the final sale.

To support its expansion plans, Slate has opened an office in Frankfurt. The Canadian group manages office, retail and industrial property across North America valued at C$3.5bn (€2.4bn). Its activities are divided across Slate Office REIT and Slate Retail REIT, both listed in on the Toronto Exchange.