Redefine buys control of German retail JV for €49m
London-listed Redefine International, the FTSE 250 REIT that is backed by South African investors, has agreed to invest €49m to take control of the joint venture holding the Leopard portfolio of 66 German retail properties, in which it previously held a 50% stake. The assets have been independently valued at €175.5m.
The acquisition of the 44% stake reflects a net initial yield of 7.4%, with the investment expected to deliver a cash-on-cash yield of 10% p.a., said Redefine International in a statement earlier this month. The €49m consideration reflects taking on €86.1m of existing debt facilities, which have an average all-in cost of 1.4% p.a. Redefine International now holds a 94% controlling interest in the portfolio.
The seller was Redefine Global, a subsidiary of Johannesburg-based Redefine Properties, which also holds a 30% stake in Redefine International. The related party transaction is conditional on independent shareholders’ approval, awaiting approval at an egm on 25th April.
The properties in the Leopard portfolio generate €13.9m of gross rental income. The portfolio encompasses 138,000 sqm of GLA in a mixture of stand-alone supermarkets, foodstore-anchored retail parks and cash & carry stores, of which 86% are in western Germany and Berlin, with the rest in eastern Germany. The occupancy rate is 99.2%.
With the deal, Redefine International has reinvested proceeds from the recent €106m sale of a 49% stake in the VBG German office portfolio. “In line with our strategy, this transaction represents a good opportunity to recycle capital into assets which generate a strong income yield, having sold the VBG portfolio of German offices at an 8.6% premium to book value,” said Mike Watters, CEO of Redefine International. “Furthermore, our controlling interest in the portfolio will provide more flexibility over future asset management initiatives and reinvestment decisions.”
Redefine International is a UK REIT with a secondary listing on the Johannesburg Stock Exchange. It has £1.5bn of commercial real estate assets under management in the UK and Germany.