Madison International Realty has acquired a 5% equity stake in Signa Prime Selection, a €12.5bn European real estate portfolio.

Luxemburg-based MIELI II, managed by Madison, bought the stake in Signa Prime’s portfolio and development projects, as well as the 60 asset Kaufhof real estate portfolio, from majority owner Signa Holding.

The portfolio, which includes KaDeWe Berlin, Oberpollinger and Alte Akademie in Munich, spans 2.4m sqm and includes luxury retail, department stores, office, hotel and residential assets.

About 80% of the portfolio is located in Germany, with 18% in Austria and 2% in Italy.

The Benko Family through Signa Holding will remain the majority shareholder In addition to the investment in the portfolio, and Madison said it will explore potential opportunities to partner with Signa on future acquisitions both at an asset and company level.

MIELI II now joins Signa Prime’s current shareholder base, which is primarily German and Austrian including German sovereign wealth fund RAG Stiftung, R+V Insurance Group, the Peugeot Family with FFP and others.

Matthias Cordier, managing director at Madison International Realty said: “This transaction fits extremely well with Madison’s strategy, allowing us to take an investment in one of the most significant and attractive portfolios in Europe.

“Furthermore, Signa Prime not only comprises a number of extremely high-quality properties which offer long term stable cash flows in our core European markets, but it also provides great upside potential from rental reversion and a number of opportunities to create value through development and redevelopment.”

Derek Jacobson, Madison International Realty co-CIO, said: “Our investment also allows Signa to continue to diversify its investor base. We are impressed with the quality of Signa’s management team and continue to believe in Germany as a core Madison target market.”