AXA German food store sale testifies to strength of market

Few investors were interested in acquiring AXA Real Estate's food store portfolio in Germany, which ultimately went to Fairvesta Real Estate Fund, according to adviser DTZ.

The broker, which was appointed in May 2012 to market the assets, said there was little interest for the properties, which provided a weighted average unexpired lease length of only 6.5 years.

'Due to the probable problems in retrieving financing, there were only a few investors interested in the portfolio, largely special funds,' Jan Stadelmann, head of investment for Germany told PropertyEU.

The closing of this core-plus transaction testifies to the strength of the German property market. 'The main difficulty of this deal was the short lease term and, even so, a few investors were interested. It does not matter whether it is a shopping centre, warehouse, discount store or a high street asset, there is always appetite for German retail property investments,' Stadelmann noted.

Fairvesta Real Estate Fund signed the purchase contract in December with the portfolio consisting of 21 food retail assets located across Germany from AXA Real Estate Investment Managers. The portfolio comprises around 40,000 m2 of space and its 21 units range in size from 1,200 m2 to 2,600 m2. The assets are located across Germany but predominantly in Northern Germany, Saxony, Bavaria and Rhineland Palatinate.

The portfolio is currently 98% let to major European and national food retailers including Netto, which accounts for 41% of rental income, and Rewe (19%)

DTZ acted as agent on behalf of AXA Real Estate. Bilfinger Berger acted for the buyer.

This is the second food store portfolio sold by AXA Real Estate in recent months. In February 2013, the French investment manager sold a portfolio of 72 food retail assets to Swedish state-owned pension fund Tredje AP-fonden (AP3).