AEW Europe makes big retail, logistics buys

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The Paris-based AEW Europe made two significant acquisitions this month, one for its €2.2bn LOGISTIS platform and the other a major portfolio for its €9bn retail holdings. Both deals come on the heels of earlier AEW announcements of major fundraisings for further European expansion.

The retail deal consists of 20 high street assets across a range of German cities, with the seller being BMO Real Estate Partners. The prices was said to be "in the three-digit million range. The assets, known as the Sidewalk portfolio, will be held by a Spezialfonds managed by HansaInvest Hanseatische Investment and set up for a north German pension fund in 2010.

AEW said the portfolio is in prime retail locations of large and medium-sized cities. The 60,000 sqm portfolio also includes retail parks in Bavaria and Baden-Wurttemberg.

Isabelle Rossignol, head of retail, said AEW Europe was looking to grow its existing €9bn retail portfolio and strengthen its position in the German market. 'The acquisition of this high profile retail portfolio demonstrates our ability to successfully identify and execute significant cross-border retail transactions, leveraging our expertise in this sector following the merger between Ciloger and AEW last year," she said. She added, "we have an exciting pipeline of opportunities" in the German market.

In March this year AEW raised more than €415m in equity from institutional investors, more than the planned €400m, for its Europe City Retail Fund. Of this it has already invested €200m, including buying prime properties in Rome and Copenhagen.

In logistics, AEW boosted its LOGISTIS platform to over 220,000 sqm of assets under management in Germany by buying the METRO distribution centre in Kirchheim an der Weinstrasse, about 85k south of Frankfurt am Main.

The deal, which when completed will comprise of 49,500 sqm of lettable space, was concluded as a forward purchae from Hamburg-based developer IXOCON. The asset, fully-let to METRO on a long-term lease, will serve as METRO's strategic distribution hub for south-west Germany.

The LOGISTIS platform comprises over 2.5m sqm of logistics space across Europe, with an occupancy rate of 98%. The platform was created 18 years ago, and the current portfolio consist of about 75 Grade A logistics assets, with a furhter 25 under development, in France, Germany, Belgium, the Netherlands, Poland, the Czech Republic, Italy and Spain, with a total value of approximately €2.2 billion.

According to Rémy Vertupier, Fund Manager of LOGISTIS: “Through this high-quality development project with Metro and IXOCON, we have successfully reinforced our footprint in the German market, which is of strategic importance to LOGISTIS. We look forward to further developing our relationship with IXOCON in Germany, as we continue to grow the LOGISTIS platform across European markets with the objective to reach a portfolio size of more than €3 billion.”

Separately, AEW made a further opportunistic investment with its local partner Kintyre when it bought a 10,000 sqm mixed-used asset in Haldensleben, near Magdeburg in Saxony-Anhalt. The asset, 70% retail space, is 85% let with a WALT of 3.4 years to tenants including Edeka, Kik and Bundesagentur für Arbeit, and produces an annual rental income of €1.2m.

The AEW partnership with Kintyre, which specialises in German retail, has already bought 10 assets for its opportunistic programme, which targets German retail assets valued between €5m and €15m. According to Paul Shiels, partner at Kintyre: “This acquisition provides all the attributes we are seeking with this venture, being the dominant value shopping destination in Haldensleben with a diverse tenant line- up. Importantly, the acquisition provides the ability to add value through active asset management.”

Overall, with diverse institutional partners, AEW has completed over 65 value add and opportunistic transactions over the past 6 years with a total value of €3bn.