Ex-TAG Immobilien boss Elgeti returns with new retail REIT
German property company Wunderkind Rolf Elgeti seems to be making a comeback in a variety of entrepreneurial guises since departing from listed residential property company TAG Immobilien a year ago. He's popped up as the new owner of third division footbal team Hansa Rostock, as an investor in fintech startup Creditshelf, which provides loans to mid-sized companies – and now, as the chairman and main shareholder in a new arrival on the German REIT scene, Deutsche Konsum Reit-AG.
The new company, headquartered in Potsdam, has already invested in 30 retail outlets as part of its development strategy. Elgeti describes the plan as" buying local shopping centres across the country in sustainable micro-locations including in B- and C-cities, with at least two main anchor tenants." The company's existing portfolio has 146,000 sqm and a valuation of €125m, with a annual rental income of €13.6m.
The assets, so far all located in eastern Germany, were bought for an average multiple of 7.8 times annual rent, which Elgeti says is because he's looking for assets with short remaining lease terms, or even high vacancy rates, or those requiring high initial capex or whose loans are non-performing. The goal is to get existing tenants to extend their leases because of new investment in the asset, and so to attract new high-paying tenants to join them.
Individual investment size has been between €500,000 and €37m, with €20m the most paid for any single asset. Most fall below the €10m mark.
Setting the company up as a REIT was not an obvious move, given the miniscule size of the REIT sector in Germany and its somewhat 'stillborn' history. Elgeti commented, "Establishing the company as a REIT has to do with more than just tax efficiency. The structure is particularly suitable for granular and cashflow-strong commercial property portfolios like ours, while at the same time the strictly-defined REIT regulations send out a signal about the kind of quality we're offering to our investors."