UK’s Capital & Regional departs Germany to focus on UK
The UK’s specialist retail property company Capital & Regional sold its 50% stake in its German retail joint venture with Ares Management to clients and funds managed by fellow UK investor Rockspring, in a deal which puts an equity value of €105m on the joint venture.
The deal represents the last major step in Capital & Regional’s stated strategy of refocusing its business onto its portfolio of dominant UK shopping centres, and dovetails with the company’s conversion to REIT status on December 31st 2014.
The joint venture with Ares Management consisted of 23 properties with 100 retail units across five separate portfolios and mainly anchored by national grocery and DIY stores, which Rockspring will allocate to its German Retail Box Fund. The sale to Rockspring put an equity value of €52.5m on Capital & Regional’s share, but will generate about €43m in cash after transaction costs and the keeping of a small minority stake in the ongoing German portfolios for the next five years.
Rockspring CEO Robert Gilchrist commented: “The deal is illustrative of the retail acquisition strategy we have been implementing in Germany for our institutional clients over the past 10 years, and we will be progressing a range of opportunities to generate a solid distribution return whilst applying asset management expertise to extract value over time.”
Capital & Regional will now focus exclusively on its UK interests, after what CEO Hugh Scott-Barrett said had been a transformational year for the group: “Having restructured the company’s debt, undertaken a number of non-core divestments, acquired full ownership of the Mall Fund and received shareholder approval for a REIT conversion on 31 December, the proposed disposal of our German joint venture represents the last major step in repositioning the company’s focus on its core portfolio of dominant UK community shopping centres.”
Separately, Rockspring bought a 16-hectare site with permission for a fully-serviced logistics development right beside the new Berlin airport, which is still under construction after several controversial delays. The €13.5m VERDION AIRPARK deal was done in partnership with logistics developer Verdion, with Rockspring providing the full equity funding for the proposed 93,000 sqm scheme.
The development will move forward in a number of phases comprising logistics warehousing units ranging from 5,000 sqm to 40,000 sqm being delivered from this year onwards, and is expected to have an end-value of more than €85m. Verdion had previously developed the adjacent 46,000 sqm Air Link Park, where tenants include Parxel, Dachser Spedition, and Unitax.
According to Rockspring’s Berlin-based partner and head of Germany, Stuart Reid, “This underlines our commitment to Berlin and our belief in the growing importance of strategic logistic sites in Germany, which benefit not only from strong regional access, but which are also within easy reach of the city and airport. With Berlin’s projected growth and Berlin Brandenburg Airport expected to become one of Europe’s busiest airport hubs on opening, we consider this site to be one of the best in the region.”