Benson Elliot, the UK-based private equity real estate fund manager, has acquired a portfolio of three regionally dominant German convenience retail assets from Brack Capital Properties for €175 million. The Vendor has retained a minority stake in the transaction.
The portfolio comprises 100,600 sqm of lettable space across three properties and more than 3,500 car parking spaces. The centres, which serve markets outside the cities of Dortmund, Hanover and Rostock, are long-established and trade area dominant. The centres have a strong occupational history and are currently 99% let on long and seasoned leases. Tenants include occupiers with a high resilience to e-commerce penetration, including leading German grocery chains and DIY operators.
The largest tenants have recently made significant capital investments into their stores, including to support order fulfilment and regional distribution strategies, highlighting their commitment to locations and formats that would be difficult to replicate today. The asset management strategy for the properties will focus on an optimisation of lease terms and space usage, as well as an enhancement of the tenant mix. This will see the portfolio maintain its community-led offering, catering to the local demographic of each market, whilst enhancing the visitor experience.
Modulus Real Estate, the Hamburg investor and asset manager, supported Benson Elliot in the transaction and will manage the three assets.
Joseph De Leo, Senior Partner at Benson Elliot, said:
“This acquisition reflects our continued confidence in market dominant, needs-based retail formats. While there is much debate around the challenges facing the retail sector, these properties are established anchor points for daily shopping needs, resilient to e-commerce growth and of a scale that would make them difficult to replicate today. Moreover, traditional retail sales in Germany are on a positive trajectory, underpinned by favourable economic conditions, including strong real wage growth. As a consequence, assets of this nature, with their robust cash flow generating capacity, continue to be prized by institutional and other investors seeking secure cash flow streams in a low interest rate environment.”
Carl-Christoph Pieper, Managing Director at Modulus, said:
“The portfolio is extremely strong in location quality and local dominance leading to sustainable tenant demand. Although the properties are almost fully let, we will put a strong focus on optimising the tenant set-up in close collaboration with the existing and prospective tenants.”
In one of Birmingham’s largest office investment deals of 2019, Benson Elliot Capital Management, the UK-based private equity real estate fund manager, has sold 11 Brindleyplace, Birmingham to Blue Noble on behalf of Benson Elliot Real Estate Partners Fund III (“BEREP III” or the “Fund”).
Located within the 17-acre Brindleyplace mixed-use development in central Birmingham, the award-winning property provides 110,000 sq ft of grade A office space over 13 floors. Since acquisition in 2014, Benson Elliot has grown occupancy from 50% to close to 90% today incorporating F&B content and serviced, flexible accommodation.
James Jakeman, Partner at Benson Elliot, said:
“We are pleased to conclude this transaction with Blue Noble bringing total realisations from our successful Fund III regional office strategy to c. £300 m. In the context of wider market challenges, closing the sale highlights the quality of the underlying real estate and the continuing positive transformation of its micro location in Birmingham”.
Tobias Evans, CIO at Blue Noble, said:
“Following the team’s historic involvement with the wider estate, we are delighted to have acquired 11 Brindleyplace on behalf of Blue Noble Real Estate Opportunities II (“BNREO II”). Birmingham continues to benefit from a significant amount of investment, both public and private. Hosting of the Commonwealth Games in 2022 and the medium-term arrival of HS2 will further enhance Birmingham’s appeal. 11 Brindleyplace offers us an opportunity to implement our income and growth strategy with proactive and engaged asset management initiatives for the benefit of our investors and our tenants”
Benson Elliot was advised by Cube Real Estate and Savills. Blue Noble was advised by BNP Paribas, Bryan Cave Leighton Paisner and JLL Debt Advisory.
A joint venture between UK-based Benson Elliot and US-based Walton Street Capital, L.L.C. (“Walton Street”), in partnership with Schroders (the “JV”), has sold the Sheraton Hotel in Warsaw to Patron Capital (“Patron”), the pan-European institutional investor focused on property-backed investments. The transaction marks the eighth and final disposal from the Prime Europe Hotels (the “Portfolio”), a portfolio of eight full-service hotels across seven European gateway cities acquired in October 2015.
The eight freehold properties total 2,308 rooms in Venice, Paris, Milan, Rome, Warsaw, Nuremberg and Brussels, and are located adjacent to key demand generators, either in metropolitan city centres, high-growth commercial corridors or leisure destinations.
The JV has unlocked significant value through the deployment of bespoke capital expenditure programmes and asset management initiatives, including room upgrades, management contract renegotiations, and operations and revenue management optimisation. The weighted hold period across the portfolio was 18 months and the assets have all been sold ahead of underwriting, delivering over €600 m in proceeds to investors.
The Sheraton Warsaw is a five star hotel, with 350 bedrooms and is located in the centre of the Polish capital. Under its ownership, the JV deployed c. €6 million to refurbish rooms and common areas, and secured planning permission for an additional ground floor retail unit.
Marc-Olivier Assouline, Benson Elliot Principal and Director of Hotels, said:
“This has been a highly successful undertaking where we joined forces with two long-standing partners, identifying a compelling opportunity with significant value-add potential, which we have now delivered in an efficient timeframe. We achieved attractive pricing for all the assets, taking advantage of the increasing institutional appetite for hotels and delivering superior returns for our investors.”
Stephane Obadia, Schroder’s Head of Hotel Investment, said:
“The acquisition of the portfolio has been a challenging but unique opportunity to bring a new life to one of the most attractive collection of hotels across Europe. While Schroders will continue to manage the repositioning of the most significant properties, this transaction concludes a very successful collaboration with our partners, built on a common vision and a high level of trust put on our capacity to execute such changes.”
Benson Elliot Capital Management, the UK-based private equity real estate fund manager, has raised over €800 million for its latest pan-European value-add / opportunistic fund, Benson Elliot Real Estate Partners V (“BEREP V” or the “Fund”). Launched in 2018, the Fund was substantially raised in six months, with a repeat investor rate of over 95% from the prior fund. The capital was raised by Benson Elliot’s in-house team.
BEREP V was raised from a global group of c. 40 institutional investors, including university endowments, insurance companies, pension plans, sovereign wealth funds and family offices. Approximately 40% of the capital was sourced from the US, 35% from Europe, with the balance from the Middle East and Asia.
BEREP V will continue the Firm’s successful value-add / opportunistic investment approach, which has delivered a 14% net internal rate of return across prior funds. The Fund will target institutional quality assets, with a primary geographic focus on the UK, France, Germany, Italy and Spain, and a principal sectoral focus on offices, retail, residential and hotels.
Laura Coleman, Principal and Head of Investor Relations at Benson Elliot, commented: “We are extremely pleased with the speed and efficiency of this fundraise. Most gratifying is the strong support from our existing investors. It is clear that Benson Elliot’s consistent track record, generated over almost two decades, provides our investors with the confidence to entrust capital to the firm, fund after fund.”
Marc Mogull, Executive Chairman and CIO at Benson Elliot, commented: “Benson Elliot has been, and remains, a specialist in Europe’s middle markets. We have consistently delivered on our commitment to provide superior risk-adjusted returns across cycles. As with previous funds, we’ve consciously limited the size of BEREP V to avoid the deployment-driven pressures that can confront managers of larger funds. We’re fortunate to enjoy significant support from our investor partners, who co-invest alongside the BEREP funds, enabling us to pursue larger transactions. We have a healthy pipeline, but will maintain our characteristic investment discipline, prioritising opportunities that offer realisable value-add potential and a clear path to future liquidity.”
Benson Elliot’s predecessor fund, BEREP IV, had a final closing of €634 m in June 2016. It is fully committed to 18 transactions, having returned c. 50% of invested capital. To date BEREP IV has delivered realised returns of 58% IRR / 1.9x multiple.
A joint venture between Benson Elliot, the London-based private equity real estate manager and Générale Continentale Investissements (GCI), the leading Paris real estate investment and development group, has started works on a 22,300 sqm office redevelopment in the heart of La Défense in Paris.
Latitude will provide 22,300 sqm of Grade A office space over eight floors and will offer occupiers a modern working environment. Its expansive floorplates – a rarity in a La Défense market dominated by tower blocks – will feature landscaped break-out areas, as well as state-of-the-art amenities for both tenant and public use. Latitude is scheduled to complete in Q2 2020.
Latitude is distinctive for its lateral design, conceived by the award-winning STUDIOS Architecture. The building will be highly visible in the La Défense market, situated adjacent to the La Défense ring road and close to the Centre of New Industries and Technologies (CNIT), a major convention centre and La Défense landmark.
Rémi Monglon, Principal and Head of France at Benson Elliot, commented: “After two years of hard work, alongside first class architects and developers, we are pleased to introduce Latitude. The property has a unique design, and upon completion will deliver efficient, top quality office space, with the highest environmental credentials, into a sub-market seeing limited new supply.”
“We are truly excited about this project and are confident that Latitude will make a significant contribution to the new, vibrant face of La Défense. We are offering our users highly flexible and new ways of working. Our aim is to expand what is possible within a working environment and enhance what this world-class business district has to offer.” said GCI Managing Director Sharon Raingold. “In an area where towers dominate the skyline, we believe the large, lateral floorplates of Latitude will encourage a less hierarchical and more forward-thinking business model, where innovation and collaboration can be celebrated,” Sharon continued.
La Défense is Europe’s largest business district and is home to over 500 companies, including multinationals and Fortune 500s. Following recent infrastructure investment, accessibility to public transport has significantly improved, with Latitude now linking directly to the CNIT and the main hub of La Défense.
Latitude will be built to the highest environmental standards and is set to receive CSR credentials including HQE ‘Exceptionnel’, BREEAM ‘Excellent’, Effinergie+, Well Core and Shell ‘ready’, Wiredscore Platinum.
Bouygues Bȃtiment Ile-de-France – Rénovation Privée has been engaged as general contractor and financing was secured from BNP Paribas and SCOR.
Benson Elliot, the UK-based private equity real estate fund manager, has acquired 100% of the units in an Italian real estate investment fund, ER Office Fund 3 (“EROF3”), which has acquired adjacent business parks in Segrate, northeastern Milan. EROF3 is managed by Europa Risorse SGR, a Bank of Italy regulated fund manager. The two business parks were purchased in separate transactions, from BNP Paribas SGR and from Toscanini Fund, managed by Generali Real Estate S.p.A. SGR.
Segreen Business Park, acquired from BNP Paribas SGR, comprises c. 27,000 sqm of grade A office space in two buildings, with parking for over 900 cars. The project was delivered to high environmental standards (LEED Gold and Platinum certifications) between 2011 and 2013. Segreen Business Park is over 90% occupied by a group of largely international corporates, including Kraft Heinz, Lenovo and Zimmer Biomet.
Nest Business Park, acquired from Toscanini Fund, managed by Generali Real Estate S.p.A. SGR, comprises 18,000 sqm of office space in three buildings, together with parking for over 500 cars, set within a beautifully landscaped environment in Segrate. Originally developed in the 1980s, the buildings were previously the Italian headquarters of Microsoft. Currently vacant, the property presents an opportunity for substantial refurbishment and integration with the popular and prominent Segreen Business Park.
Joseph De Leo, Benson Elliot Senior Partner, said: “We’ve been engaged in the Milan market for decades, but see a particularly compelling investment story right now, as growing demand for grade A office space confronts very limited new supply. We’re well positioned to capitalise on the opportunity given our local capabilities, and look forward to delivering some attractive new office accommodation into this increasingly strategic locale.”
Europa Risorse will implement the value-enhancement strategy, drawing on their deep local knowledge and extensive asset and development management skills. Nest will be redeveloped and integrated with Segreen, consolidating the two business parks to create a larger, better organised offering, with increased floor area. The finished product is expected to achieve LEED Gold certification, and provide state-of-the-art amenities including restaurants, a conference centre, a nursery and a gym.
Segrate is situated just 10km from Milan’s city centre and a few minutes from Linate International Airport. Linate will see over €150 million of investment in the near term, as the airport adds a new terminal. Segrate itself is seeing significant infrastructure investment, with €400 million in road and rail works planned (including the extension of the Metro to Segrate), in part to support the c. €1.4bn development of Westfield Milano set to open in 2021.