German real estate investor Deutsche Konsum REIT (DKR) has sold a package of 14 retail properties to an institutional German real estate investor in the retail segment.
The two parties agreed not to disclose financial details, but said the sale price is around 4% lower than the company's official valuation from September 2023.
The portfolio, with a total rental area of 72,000 m2, is spread across various locations in Germany - in Ludwigslust, Guben, Stendal, Hohenmölsen, Aschersleben, Tangerhütte, Eisenhüttenstadt, Seebach, Elsterwerda, Eggesin, Lübz, Lübtheen, Staßfurt and Osterfeld.
The properties include different types of stores, from discount grocers to retail parks.
They generate €5.5 mln in rent each year, with leases lasting an average of 5 more years. About 6% of the space is currently vacant.
The ownership transfer, including any associated benefits and burdens, is expected to be finalised by June 2024.
DKR bought the properties between 2015 and 2022, averaging a 10% initial return on investment. The leases typically had 5.7 years left, and vacancy rates were around 6% back then. During ownership, DKR collected over €36 mln in rent and raised the average annual rent by 10%.
The company plans to use all the proceeds from the sale to pay off bank loans and some of its maturing bonds. This will significantly improve its loan-to-value ratio by several percentage points.
DKR is also working on further sales to streamline its real estate holdings and use the extra cash to optimise its debt situation.
