Redos launches retail park fund

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Hamburg-based retail property group Redos Real Estate has launched a new retail park fund that it intends to grow to €600m, the group announced this week.

The regulatory envelope for the new AIF, Redos Einzelhandel Deutschland II, will be provided by fund manager Union Investment. Redos will be responsible for key areas of fund, asset and transaction management. Like its predecessor, Redos Einzelhandel Deutschland, the new fund is designed for professional and semi-professional investors.

Earlier this month, Redos made its first acquisition for the fund when it acquired the ‘Bordeaux’ portfolio comprising ten retail parks in Germany for around €240m from Invesco Real Estate  and AEW Europe. The parks, which were developed by Hanseatische Betreuungs-und Beteiligungsgesellschaft (HBB), are located in states such as North Rhine-Westphalia, Baden-Württemberg, Lower Saxony, Hessen and Schleswig-Holstein. The portfolio has a total rental area of around 101,000 sqm with an occupancy rate of 98 %. Tenants include supermarket chains Kaufland, Edeka, Real and REWE.

‘We feel there is great long-term potential here,’ said Torsten Wesch, managing director and head of fund management at Redos. ‘The new Redos Einzelhandel Deutschland II special fund will gradually be expanded further.’

Interest in German retail parks has soared to new heights this year as investors look for more ways to diversify that offer a secure income stream. Retail, particularly food-anchored retail, is swiftly becoming the ‘sweet spot’ due to strong growth in the sub-sector. Retail turnover has increased by around 13.1% in Germany since 2010, reaching €483bn in 2016, with the share of online retail at 10.9%, according to a study, ‘Food Retail in Germany – Market Structure Data 2016’, carried out by TLG Immobilien this summer. Food-anchored retail has witnessed the strongest growth, jumping by 16.6% in the period, driven largely by the unwillingness of many German consumers to buy their food online. (Food retail accounts for just 1.5% of the online market.)

Also this month, FTSE 250 income-focused UK REIT, Redefine International, sold its Leopard portfolio to Patrizia Immobilien for €205m, reflecting a 10.8%, or €20m, premium to the portfolio’s book value at the end of August. The portfolio’s annualised net rental income of €12.7m reflects a net initial yield of 5.8% on the sales price and an approximate 8.3% yield on equity.

The portfolio comprises 66 German retail properties, including stand-alone supermarkets, retail parks anchored by food stores and cash-and-carry stores totalling more than 138,000 sqm. Following the sale, Redefine International has reduced its weighting in Germany to 18%, down from 27%.

Redos was advised by the law firm Noerr. Invesco Real Estate, JLL and Clifford Chance advised the seller. Redos currently manages a portfolio worth more than €1.3bn at more than 44 locations throughout Germany comprising 562,000 sqm of rental space.