Allianz Real Estate and UK REIT Hammerson are buying a French retail asset from Unibail-Rodamco for €312.5m.
The two companies will jointly invest in the Nicetoile Shopping Center in Nice.
Allianz said it would take a 90% stake in the city centre asset, with Hammerson holding the remaining 10%.
Head of France, Olivier Wigniolle, told IP Real Estate the purchase was part of a plan to increase the institutional investor’s exposure to French retail.
The sector currently accounts for around 20% of its €7.3bn French portfolio.
Wigniolle said: “Our exposure to the retail sector is not enough, so we are looking to increase that.”
The outlook for the French economy, Wigniolle said, was “not that brilliant right now”.
Dominant shopping centres, however, are offering “resilient cashflows” and increasing footfall.
“There are opportunities – particularly for institutional investors,” he said.
The Nice asset, he said, benefits from improvements made by the city’s local authorities and sits “somewhere between a shopping centre and high street retail”.
Allianz said the asset, in Avenue Jean Médecin, attracts around 13.1m visitors.
Tenants include Hollister, Sephora and Swarovski.
France’s historically constrained supply of shopping-centre construction permits, Wigniolle said, has made investment in the sector competitive.
“We therefore consider a yield of around 5% for a performing centre as being a reasonable price,” he added.
The sale of the asset by current owner Unibail-Rodamco is set to complete early next year.
The firm has owned the centre for 14 years, having bought it in 2000 from Dutch pension fund PGGM.
Hammerson will manage the 15,389sqm shopping centre, which opened in 1982 and includes 2,018sqm of office space.
Separately, the UK firm said its 10% stake was being bought for £24m (€30m).
Jean-Philippe Mouton, president of Hammerson France, said the transaction expanded the company’s retail footprint in France, providing additional income stream for its portfolio.
Unibail-Rodamco has been streamlining its French shopping-centre portfolio, having announced plans to dedicate nine months to selling non-core assets earlier this year.
The company had initially planned to sell properties over a five-year period.
In July, Allianz bought a majority stake in an Italian shopping centre from CBRE Global Investors.
The interest in the Fiumara centre, in Genoa, was bought for Allianz’s Italian insurance companies for around €85m.
