DEAL WATCH: Shopping centre investors strike in recovering markets

The spread of shopping centre investment into southern Europe, the Netherlands and Ireland during February is further evidence of the broadening market recovery across Europe.

The largest shopping centre transaction in February occurred in Paris. A French-US joint venture led by developer-investor Apsys acquired the Beaugrenelle shopping centre in the 15th district of Paris for €700 mln.

While France, and mainly Paris, along with the UK and Germany, form the 'Big Three' of core European markets, the Parisian investment market has been subdued of late. It was one of the few city markets to see its 2013 volumes drop compared to the previous year. RCA data, republished in PropertyEU's Top Investors, cities & locations , shows that real estate investment in Paris dropped from €8.9 bn in 2012 to about €6 bn in 2013.

Concerns about the strength of the French economy and government policy persist in 2014 but several large transactions in the first quarter, including the Beaugrenelle deal and Lone Star's acquisition of Coeur Défense - the largest office tower in Europe - prove investors are confident enough to pluck the French capital's crown jewels.

IRISH EYES ARE SMILING
Dublin - a poster boy for recovery compared to Paris' spluttering business environment - chalked up another success story in February. This involved Liffey Valley, one of Ireland's largest shopping centres, which was the subject of an abortive €350 mln sale in March 2010.

Fast forward almost exactly three years and Aviva Investors managed to sell off its 72% interest in the 46,500 m centre to HSBC Alternative Investments and Hines for €250 mln. Hines has taken a minority equity stake alongside HAIL, and will assume the role of asset manager. The remaining 27.2% is owned by Grosvenor Britain & Ireland, which will retain its investment in the property.

GOING DUTCH
Domestic and foreign commentators have spent the last few years bemoaning the sorry state of the Dutch real estate sector. An upturn in transaction activity which set in during the latter part of 2013 was largely focused on the Zuidas in Amsterdam, the country's main business district. Retail, at least according to some market watchers, was a lost cause.

Given the very weak trading of shops in the Netherlands over the last year or two, one could have been forgiven for raising an eyebrow at Savills' contention during MIPIM that retail would drive transactions in 2014. February's deals support the broker's assertion.

US investor Mount Kellet Capital Management led the charge by helping Dutch listed player Corio with its programme to offload non-core assets. Mount Kellet acquired 10 shopping centres from Corio for €213 mln. Also in the Netherlands, an unnamed buyer bought the Batavia Stad Outlet in the central Dutch city of Lelystad for €100 mln.

German investor Aachener Grundvermogen stepped up its presence in the Dutch market by acquiring De Markies in the Hague for some €80 mln. And Wereldhave, like Corio an Amsterdam-listed company, took full ownership of the Koperwiek shopping centre in Capelle aan den Ijssel near Rotterdam from its joint venture partner in a €60 mln deal.

SOUTHERN COMFORT
The bounce-back in southern Europe continued in February with significant retail transactions in both Spain and Italy. The largest deal was backed by US billionaire Seth Karman. His Bauport Group was part of a joint venture that acquired seven shopping centres and a retail park in Alicante from Dutch listed player Vastned for €160 mln. UBS Real Estate took the opportunity in February to buy the Urbil shopping centre in San Sebastian for €60 mln.

Over in Italy, Sorgente Group acquired a portfolio of three department stores in Milan leased to retailer Coin for €77 mln and BNP Paribas REIM took over the Fonti del Corallo shopping centre in Livorno for €47 mln.

Click on the link below for a list of the top 20 retail property deals recorded by PropertyEU Research in February 2014.