Cornerstone eyes new takeover candidates in Germany

Cornerstone Real Estate Advisers (formerly Protego Real Estate Investors) sees more opportunities for retail acquisitions in the German market following its purchase of an 8,500-m² supermarket in Wuppertal through its German Retail Fund. ‘More product is coming onto the market and there are some interesting opportunities. Vendors are becoming more realistic about pricing,’ said the fund's investment manager Calum Barclay in an interview with PropertyEU.

In early August, Cornerstone announced its first acquisition in Germany since taking over the management of the German Retail Fund in 2008. The property was acquired from GWB Vermögens- und Grundbesitzverwaltungsgesellschaft, a subsidiary of German listed company GWB Immobilien. It is let to Real, a subsidiary of the Metro Group, until 2026. The purchase price reflects a net initial yield of around 8%.

The retail property will be repositioned in due course as a core asset following an agreement with the tenant to refurbish the building in exchange for a new 15-year lease. The deal marks a ‘significant step forward’ for the fund, said Barclay. ‘This deal epitomizes the fund’s strategy which we are pursuing after a period of relative inactivity in the market. It demonstrates our ability to add value for our investors, achieving higher returns with limited risk.’

The firm is currently in talks on a number of deals, Barclay said. The focus is on value-add opportunities in neighbourhood shopping centres, hypermarkets or out-of-town schemes throughout Germany, he added. ‘I expect to complete a couple of acquisitions by the end of the year, either portfolio or single asset transactions.’

The Cornerstone German Retail Fund is a euro denominated fund domiciled in the Netherlands. The fund’s target return on equity is 16% per annum, net of all costs. Barclay said the aim was to grow the fund to an investment volume of around EUR 120-130 mln. In Europe, Cornerstone also manages a EUR 1 bn retail fund in the Nordics and offers global listed property securities products through its offices in Amsterdam as well as Hong Kong and the US.

The German deal follows hard on the heels of Protego’s name change to Cornerstone following the acquisition of the UK and Continental European real estate investment management company by Cornerstone in January this year. The tie-up with Cornerstone provides Protego with more opportunities for stronger growth, noted Peter de Haas, Co head of Business Development at Cornerstone’s Rotterdam office. 'We now have a bigger and more stable platform with more co-investment capacity which has become more important for investors who want a greater alignment of interest. We can now also offer our European clients access to US products while US investors have access to a European platform which we view as a strong benefit.'

See the August/September issue of PropertyEU for the full interview. Click here to obtain a free copy: