Morgan Stanley/Redos in major eastern German retail acquisition
In a significant German retail transaction, a consortium led by a fund from Morgan Stanley Real Estate Investing (MSREI) and Hamburg-based asset manager Redos Real Estate has acquired four shopping centres in eastern Germany and Berlin from M&G, the real estate manager of UK insurer Prudential. This is the fourth German retail deal the two partners have done together .
The centres changing owner are Eiche Shopping Park (Kaufpark Eiche) and Havel-Park in Dallgow near Berlin, Dresden Shopping Park (Kaufpark Dresden) and the Wust mall in Brandenburg just west of Berlin. All are anchored by the general store chain Kaufland, and together make up the so-called Christie portfolio put together between 1993 and 1995 by Lidl & Schwarz, the parent company of discount grocery chain Lidl and Kaufland.
The properties, which are managed by shopping centre manager Mfi, are almost fully occupied, but given their advanced age are now in need of modernisation – particularly the centres in Dallgow, Dresden and Eiche. Specialist Münster-based developer HLG has been hired to pump in ‘high double-digit millions’ to renovate the centres over the next three years. They will then be primed for re-sale, say the new buyers.
The deal represents one of the largest seen in the eastern part of Germany. MSREI, which acquired the 214,000 sqm.gross lettable area portfolio in a share deal, will place it initially in its Real Estate Fund VII. Although the purchase price was not named, analysts estimate the buyers paid between 14 and 16 times annual rent, or around €400m. Notably, the Kaufland stores are among the largest Kaufland properties in all of Germany. The portfolio was financed by Hamburg-based Landesbank HSH.
MSREI executive director Patrick Lindemann commented that the portfolio met with the firm’s strategy of finding assets needing repositioning but with good cash-flow, while Redos CEO Oliver Herrmann added that the portfolio offered attractive upward capital value potential.