Corio acquires Marseille shopping centre for EUR 385m

Dutch property company Corio has acquired the Grand Littoral shopping centre in the French port city of Marseilles from Paris-based insurance company Macif for EUR 385m. Grand Littoral comprises 110,000 m² of gross lettable area (GLA) and 5,000 parking spaces. The shopping centre is the fourth largest in France and will be Corio's largest shopping centre in value terms.

Ownership of Grand Littoral will be transferred in March 2008 without additional cost as Corio is registered as a SIIC, the French version of a real estate investment trust (REIT). The company, listed on both Euronext Paris and Euronext Amsterdam, also holds the equivalent FBI status in the Netherlands. Just over 80% of Corio's EUR 6.1 bn property portfolio consists of shopping centres spread across five countries in Europe.

Grand Littoral is located in the 16th arrondissement, north of Marseille along the A7 highway between Marignane airport and the Marseille town centre. The shopping centre consists of a shopping gallery of 42,300 m² gross lettable area (GLA) acquired by Corio and 15 medium-sized units located inside and outside the centre. Eight of the units were acquired by Corio representing 13,200 m² GLA. The other seven units representing 28,100 m² GLA and a 28,000 m2-Carrefour hypermarket were excluded from the deal with Corio.

The primary catchment area for the shopping centre is estimated at 600,000 people, in a larger influence zone of 1.6 million people. The nearby region is undergoing urbanisation and this is expected to boost the population further. Grand Littoral attracts 13 million visitors per year resulting in sales over EUR 350 mln. The recent reopening of 'Zone Azur' with new tenants and a new restaurant area will reinforce the current merchandising mix of approximately 215 shops, the Dutch retail property specialist said.

The shopping centre was developed by Trema, the real estate subsidiary of Macif, and opened in 1996. Corio acquired the Trema portfolio of 10 shopping centres in France, Spain and Italy and one office in Spain from Macif in November 2001. The Grand Littoral shopping centre was excluded from the purchase because of technical difficulties in Zone Azur. Under the agreement with Corio, Macif retains responsibility for the last phase of renovation works that are mainly focused on the parking area.

Corio said that Grand Littoral is the dominant shopping centre in the region but has not reached its full potential. In 2008 the net initial yield is expected to be just under 4%, rising thereafter on the renegotiation of about 50% of the leases and further restructuring.

The acquisition increases Corio's fixed pipeline from EUR 1.07 bn in 30 September 2007 to EUR 1.5 bn, and the total pipeline from EUR 2.1 bn to EUR 2.5 bn. When Grand Littoral is taken into operation it will increase Corio's total portfolio from EUR 6.1 bn to EUR 6.5 bn, the retail share to 83% and the leverage from 36.0% to approximately 40%.

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