Madison buy 5% stake in trophy Signa portfolio

Real estate private equity firm Madison International Realty has purchased a strategic 5% equity stake in Signa Prime Selection, a European real estate portfolio, through its Luxembourg vehicle MIELI II. The move gives Madison a stake in 87 European properties, mainly luxury retail, department stores, offices, hotels and residential.

Signa Prime Selection is worth €12.5bn, with 27 properties across luxury retail, department stores, office, residential and alternative asset classes. It totals 2.4 million sqm and enjoys 100% occupancy across its prestigious properties, along with a long average unexpired lease terms of 18 years. Many of the rent levels are below current market rates.

The Signa assets include KaDeWe Berlin, Oberpollinger and Alte Akademie in Munich, the Upper West Tower Berlin, the Alsterhaus Hamburg, the Park Hyatt hotel and Golden Quarter in Vienna, Kaufhaus Tyrol Innsbruck and the Elbtower in Hamburg. About 80% of the portfolio is in Germany, 18% in Austria, and 2% in Italy.

MIELI II also features a portfolio comprising 60 Galeria Kaufhof assets belonging to majority owner Signa Holding, through the Benko family of Signa’s Austrian founder René Benko. Assets include Galeria Kaufhof Alexanderplatz Berlin, Zeil Frankfurt and Carsch Haus Dusseldorf. 

With the purchase, Madison becomes one of Signa Prime’s top five shareholders, and the only non-German or Austrian, joining fellow investors including RAG Stiftung, R+V Insurance Group, and the Peugeot Family Office FFP, among others. Signa Holding retains the majority stake, controlling 60% of the shares.

Matthias Cordier, managing director at Madison International Realty, said: “This transaction fits extremely well with Madison’s strategy, allowing us to take an investment in one of the most significant and attractive portfolios in Europe.

“Furthermore, Signa Prime not only comprises a number of extremely high quality properties which offer long term stable cash flows in our core European markets, it also provides great upside potential from rental reversion and a number of opportunities to create value through development and re-development.”

Madison’s co-CIO Derek Jacobson said, “Our investment also allows Signa to continue to diversify its investor base. We are impressed with the quality of Signa’s management team and continue to believe in Germany as a core Madison target market.”