Corestate buys further German highstreet retail portfolio for €115m
Luxembourg-headquartered Corestate Capital Group has made a further major retail investment in Germany with the acquisition of 31 assets on high streets in 30 mid-sized German cities across the country, including Duisburg, Limburg, Mönchengladbach and Schwerin. Corestate paid €115m for the portfolio, from an unnamed seller.
The portfolio comprises 63,400 sqm of space, with anchor tenants including fashion chains H&M, C&A and New Yorker, department store Woolworth, optician brand Fielmann and drugstore chains dm and Rossmann. The portfolio’s vacancy rate is 5%, Corestate said.
According to Corestate's CIO Thomas Landschreiber, “Pedestrian areas represent the heart of many German mid-sized cities. Strong retail brands such as H&M, dm and Fielmann are well established in these top locations. Our high-street investment strategy focuses on acquiring and managing a large number of well diversified top retail assets.”
The latest deal follows Corestate's launch earlier this year of a joint venture with Russian private equity platform Sistema Capital Partners (SCP) to buy German value-add high-street assets. SCP came into being just last year to invest in high-quality assets outside Germany’s Big Seven cities. In November last year it led a consortium to buy 21 retail properties in mid-size cities including Bremen, Essen and Düren, for a total investment of €125m, after Corestate had earlier bought another high-street portfolio for €370m.
The stated goal is to put together a €1.5bn retail portfolio over the next three years, and to tap in to investor interest worldwide in the German market, still widely seen as a 'safe haven'. Corestate hired ex-German President and prime minister of Lower Saxony Christian Wulff last year as a senior adviser to raise its profile among influential investor groups.
Corestate's founder and and majority shareholder Ralph Winter recently agreed to buy back a 28% stake in the company from Zurich-based Intershop Holding, which had paid €20m for its stake in the autumn of 2013 as part of a Corestate capital increase. It is not clear what Winter paid to buy back the shares, which gives him a 90% ownership of the company.
The sale, said to be amicable, is being backdated to the beginning of 2016. Corestate said Intershop did not want to increase its investment outside its domestic market and took a critical view on potential dilution.
According to Winter, “It was particularly valuable to have Intershop Holding as a shareholder and allowed Corestate Group to take further steps in its stable development. Due to the special quality and extraordinary growth opportunities of Corestate Group, I decided to increase my commitment to over 90% of shares. It is likely that Corestate Group will in the medium term strengthen its capital base further and significantly expand its position as an investor and asset manager within Europe.”
Corestate has completed transactions worth nearly €5.7bn since its foundation in 2006. Originally focusing on opportunistic German residential, the company's main focus now is high street retail in medium-sized German cities, along with specialist sectors such as student housing.
Last year the company abandoned plans at the last minute to launch a €150m IPO, citing unfavourable trading conditions on the London and Frankfurt stock exchanges. The plan had been to issue €100m of new shares in a capital increase as well as allowing existing shareholders to sell out, in what would have resulted in a free float of more than 50%.