WCM buys further retail centres at 6.7% yield

The listed, Frankfurt-headquartered WCM Beteiligungs- und Grundbesitz AG has been steadily and consistently rebuilding its base since its operative relaunch in 2014 as an effectively new company with several years of loss carry-forwards and tax credits to its name. We've been bullish at REFIRE on the company's prospects for the last year in our reports on the company.

The company has just bought another retail portfolio, this time with four retail centres and 52,500 sqm in the eastern states of Saxony- Anhalt, Saxony and Brandenburg, for a net price of €66.5m.

With an EPRA vacancy rate of 4% the portfolio generates annual rent of about €4.4m, giving the deal an implied gross initial yield of 6.7%. The investment is being financed via a combination of existing cash and mortgage lending with a target loan-to-value of below 50%.

Funds from Operations (FFO) amounts to around €3m, with the resulting sustainable FFO yield on the contributed equity at about 9%. The deal is expected to close before the year end.

The anchor tenant in all four centres is a leading self-service retail chain with a 37% weighting of the total rental income. The weighted average lease time (WALT) for the anchor tenant is 12.3 years, and 7.4 years for the remaining tenants.

The deal boosts WCM's portfolio value to €645 million with an annualised rental income of €38.2 million and an annualized FFO I of around €23 million. The weighted average lease time (WALT) of WCM’s overall portfolio now stands at 9.2 years with a gross yield of 5.9%. WCM's CEO Stavros Efremidis said it expects to further expand the portfolio in the coming months.