ITALY - German property firm Union Investment has entered the Italian retail segment with the €74m acquisition of a recently completed shopping centre in Pavio, Lombardy.
The company acquired the fully-let mall, completed by French retailer Carrefour in December 2007, for its UniImmo European property fund. It believes the acquisition offers a beachhead for expansion in southern European retail, despite stiff competition from institutional investors for relatively scarce Italian assets.
"The Italian retail market belongs to the biggest European retail markets. We plan to expand our shopping centre portfolio," said Fabian Hellbusch, the firm's head of real estate marketing. The firm's retail portfolio currently comprises 18 shopping centres.
He added: "The first deal with Carrefour might open the opportunity to work closer together with Carrefour in the future."
The asset is one of several developed by Carrefour for a southern European shopping mall portfolio worth between €1—1.5bn. In September the retailer announced it was to offer 20% of its €24bn property portfolio to "strategic institutional real estate partners" and other investors, including pension funds, via the partial flotation of Carrefour Property, a vehicle set up in 2000.
Union Investment's Lombardy acquisition is part of its strategy to build up small and medium-sized portfolio in European markets. "Having just started our activities in Italy we are looking now for new investment opportunities in the retail and office sector," said Hellbusch.
He said the fund had largely escaped the negative impact of the current credit crunch, with net inflows since September of €200m.
"It's important to say that open-ended real estate funds in Germany have profited a lot from selling German properties to international investors last year. The credit crunch doesn't affect the funds at all because they have stable returns and a good liquidity structure."
The Union Investment-Carrefour deal follows RREEF's €100m acquisition of Milan office block last week. In an interview with IPE Real Estate, Gianluca Muzzi, co-head of the Deutsche Bank subsidiary in Italy, said there was potential for "substantial investment" in retail across the Italian market.
In a separate development, Union Investment also acquired a Mexican logistics centre from US developer Hines last week for US$ 90.7m (€61.4m). This deal brings the firm's total properties in that market to 10.