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.”