Curzon Capital, Pamera team up to buy Halle centre

Curzon Capital Partners III (CCP III) a fund advised by Tristan Capital Partners and co-investor PAMERA Asset Management have bought the NCH Neustadt Centrum Halle in the city of Halle (Saale), the largest city in the state of Saxony-Anhalt in the eastern part of Germany. The deal is one of the more significant retail property transactions in the eastern part of the country, outside Berlin, over the last few years.

The new joint-venture investors paid €31m for the 30,700 sqm centre to APN Property Group, an Australian listed real estate trust which is withdrawing completely from Europe. The centre was built in 2,000 and has more than 60 tenants, anchored by a 10,000 sqm REAL hypermarket and including tenants such as Aldi, Modehaus Fischer, Deichmann, Rossmann, Douglas and Medimax. The news owners describe the centre as “well-managed”, albeit being sold at a competitive price as a distressed asset.

The leases have only short remaining terms, so the immediate priority will be on renegotiating leases with tenants. With only two small stores currently vacant, and according to PAMERA very good available data on rental history which shows nearly 90% of tenants trading positively, the tenant base looks stable. PAMERA has taken over the local centre management team for direct day-to-day management.

CCP III and Pamera are no strangers to each other, and this is their third joint acquisition following the purchases of the "BBW Bürohaus Bockenheimer Warte" office property in Frankfurt in March 2012, and of the Dieterich Karree in Düsseldorf in July, 2011.

In conversation with REFIRE this week, PAMERA director Christoph Wittkop explained the rationale behind the deal. “The key attraction is the performance of the Neustadt Centrum and its special importance for the Halle-Neustadt district and the adjoining region, the good tenant mix and the high degree of tenant satisfaction, and not least, the extremely good quality of construction. In addition, the vendor’s situation and the very limited competition led to an attractive purchase price that adequately offsets the risk from shorter leases and the location risks.”

Wittkop highlighted an important aspect of the shopping centre’s centrality, which sees 40% of its visitors arriving on foot.  This has to do with local loyalties, he said, with its roots going back to when Halle and Neustadt were two separate towns before merging since reunification, with Neustadt benefiting from a wide suburban hinterland that favours shopping on its own side of the river Saale.

Tristan Capital Partners’ head of investments Cameron Spry commented, “Germany is firmly in the sights of most pan-European property investors, but few are yet venturing into the country’s secondary markets. We think there is real value to be found by taking the first-mover initiative and through active asset management.”

The shopping centre is located in an affluent and densely populated area and is on a major thoroughfare linking Halle-Neustadt with Central Halle, the main train station and the A14 autobahn connecting to Leipzig 35km to the southwest. Halle has developed considerably since reunification as a regional economic centre, and houses the University of Halle-Wittenberg, now the biggest third-level institution in Saxony-Anhalt.

Wittkopf concluded, “This was a slightly unusual deal, in that such opportunities are not the norm and you could miss them by falling prey to your own prejudices as to where value can be found – in western as well as eastern Germany.  But we think here the asset itself, the tenant mix and the location – along with the departure of the previous owner - represented a compelling opportunity.”