New Schroder German retail assets yielding 5.9%

Schroder Real Estate, the property arm of the London-based investment manager, earlier this month bought a retail portfolio in Hamburg and Berlin for €51m, offering an initial yield of 5.9%. The portfolio is being bought on behalf of its open-ended fund Immobilien Europa Direkt, an investment group of Zurich Investment Foundation, which invests on behalf of various Swiss occupational pension funds.

The deal includes three freehold retail properties, dominated by the Tondo Retail Centre in Hamburg, anchored by grocery retailer REWE, a 13,000 sqm multi-let commercial centre with an average unexpired lease term of 8.5 years and reversionary potential.

The two Berlin properties, totalling 8,500 sqm, are the Cladow Center in Kladow, near Spandau in Berlin’s western district, and a Kaiser’s grocery store and centre in the Gatow neighbourhood. Both are fully-leased with Kaiser’s supermarket as an anchor tenant, with weighted average lease terms of 5.1 and 7.5 years.

According to Tony Smedley, Schroder’s head of continental European investment, “Berlin and Hamburg are two of the strongest cities in Germany and a core part of our tactical allocation strategy. Diversifying into relatively defensive, grocery-anchored retail assets is entirely consistent with our house view, and will further improve the income performance of Immobilien Europa Direkt.”