UK-based private equity real estate fund manager Benson Elliot has acquired a 18,600 m2 grocery-anchored retail asset from RDI REIT for €65.5 mln, or a 30% discount to the price RDI paid for the asset in 2013.
Located in the Steglitz-Zehlendorf borough south-west of Berlin, it is the first investment to be undertaken by Benson Elliot since the onset of Covid-19.
The transaction is in line with RDI’s strategic decision to exit its German retail portfolio. The deal reflects a net initial yield of 6.6% assuming full purchaser’s costs and a 16% discount to the 29 February 2020 market value. The operation includes the transfer of the associated €62.0 mln bank facility with a maturity date of 31 March 2021.
With direct access to the Walther-Schreiber-Platz U-Bahn station, the property is arranged over the basement, ground and first floors, with a 350-space car park located on two further upper levels. The centre is 97% occupied, with a mix of national and international retailers and a convenience/value offering including Germany’s second largest supermarket chain, REWE, drugstore retailer dm-drogerie markt, as well as a two-storey Primark.
Benson Elliot intends to reposition the centre by consolidating its grocery and convenience offering, reconfiguring space and re-gearing lease terms.
The investment marks a continuation of Benson Elliot’s German convenience retail strategy, following the acquisition of a portfolio of three regionally dominant centres in May 2019. The acquisition takes the firm’s German convenience retail holdings to €250 mln.
Joseph De Leo, senior partner at Benson Elliot, said: ‘We continue to see long-term value in market-dominant, needs-driven retail formats.’
While the structural trends underpinning the retail sector have no doubt accelerated over the past few months as a result of the enforced lockdown, the benefits of grocery-anchored centres, which remained open because of the community services they provide, were also accentuated, noted De Leo. ‘This property is in a high footfall location and we believe significant value can be created by refining its offer. Moreover, in a low interest rate environment we’re confident that investors will continue to favour the stable cash flows offered by grocery-anchored formats in fast-growing, supply-constrained locales, let on sustainable rents to strong covenants.’
Hamburg investor and asset manager Modulus Real Estate has taken a minority stake in the transaction. The firm will implement day-to-day project and asset management at the property.
