Benson Elliot, the UK-based private equity real estate fund manager, has acquired a 18,600 sqm grocery-anchored retail asset from RDI REIT for €65.5 m. Located in the Steglitz-Zehlendorf borough in the south-west of Berlin, it is the first investment undertaken by Benson Elliot since the onset of Covid.
Set in a highly visible and well-connected position on Schloßstrasse, one of the capital’s prime high streets and most affluent areas, the centre benefits from direct access to the Walther-Schreiber-Platz U-Bahn station, and sits adjacent to one of Berlin’s busiest bus terminals. The property is arranged over the basement (U-Bahn egress), ground and first floors, with a 350-space car park located on two further upper levels. The centre is 97% occupied, with a mix of national and international retailers and a convenience / value offering that has proven to be highly resilient to e-commerce penetration. Tenants include Germany’s second largest supermarket chain, REWE, leading drugstore retailer dm-drogerie markt, as well as a two storey Primark.
Benson Elliot intends to reposition the centre by consolidating its grocery and convenience offering, optimising tenant composition, reconfiguring space and re-gearing lease terms. As one of the only retail formats to remain open during the Covid lockdown, grocery-anchored assets have maintained their appeal to institutional investors seeking secure income streams.
The investment marks a continuation of Benson Elliot’s German convenience retail strategy, following the acquisition of a portfolio of three regionally dominant centres in May 2019. The acquisition takes the firm’s German convenience retail holdings to c. €250 m.
Joseph De Leo, Senior Partner at Benson Elliot, said: “We continue to see long term value in market dominant, needs-driven retail formats. While the structural trends underpinning the retail sector have no doubt accelerated over the past few months as a result of the enforced lockdown, the benefits of grocery-anchored centres, which remained open because of the community services they provide, were also accentuated. This property is in a high footfall location and we believe significant value can be created by refining its offer. Moreover, in a low interest rate environment we’re confident that investors will continue to favour the stable cash flows offered by grocery-anchored formats in fast-growing, supply-constrained locales, let on sustainable rents to strong covenants.”
Modulus Real Estate, the Hamburg investor and asset manager, has taken a minority stake in the transaction. They will implement day-to-day project and asset management at the property.