Pramerica, Swedish pension fund form JV for German retail
Pramerica Real Estate Investors, an arm of US insurer Prudential Financial, and the Third Swedish National Pension Fund AP3 have formed a joint venture to invest in German retail, and have wasted little time in already buying its first portfolio and agreeing to buy a second, in two deals worth €265m.
A first portfolio was secured in April and an agreement signed on a second grocery-anchored portfolio from funds managed by Boston-based private equity firm Taurus Investment, which remains a minority partner in both transactions, said Pramerica in a statement. Combined, this gives the portfolio over 200,000 sqm of gross lettable area in 83 assets across Germany, with large clusters around Wiesbaden, Frankfurt and Munich in the states of Hesse and Bavaria. Key tenants include food retailers REWE, Aldi, Lidl, Netto, Norma and Tegut.
According to Sebastiano Ferrante, head of Pramerica Germany, “The German market offers good prospects for retailers amid low unemployment, low household debt and rising wages. Grocery-anchored retail properties continue to fill a critical need, despite the growth of online sales, leading some retailers to expand, and providing our investors with attractive opportunities.”
Klas Akerback, AP3’s senior portfolio manager: “We see a potential for attractive risk-adjusted returns in established German regional grocery-anchored retail as tenants are strong companies, and existing sites will benefit because stricter planning rules make new construction difficult”.
AP3 is one of five so-called buffer funds within the Swedish national pension system, managing a diversified global portfolio of equities, fixed income and alternative investments valued at SEK258.5bn (€28.5bn) at the end of 2013.
The Boston-headquartered real estate private equity firm Taurus Investment Holdings will remain a minority partner in both of the transactions. Lorenz Reibling, the German-born founder and managing partner at Taurus, also commented on the deal: “We have found a strong and experienced partner that enables us to continue Taurus Euro Retail Funds I and II, and we share Pramerica and AP3’s positive outlook on the German retail estate sector.”
As recently as April this year, Pramerica teamed up with leading Dutch pension fund manager APG, which backed a new €265m lending venture targeting high-yielding debt in the Netherlands and Belgium. Pramerica Real Estate Investors had end-of-year figures in 2013 of US$55.8bn in gross assets under management.