Eurocommercial buys fully let mall in Italy for 6.75%

Euronext-listed Eurocommercial Properties has announced it is acquiring a shopping centre in the Lombardy region, in Northern Italy, for EUR 82.5 mln representing a net initial yield of 6.75%. The vendors are Coop Lombardia, Gruppo Finim and CMB.

The scheme - the largest shopping centre in the city of Cremona - is anchored by a Coop hypermarket and offers 35,000 m² of total space including a 20,500 m² retail gallery with 64 units and a seven-screen cinema. Known as Cremona Po, it opened in 2006 and is fully let to a number of tenants including H&M, Oviesse, Expert, and Sport Specialist. The Coop hypermarket is not included in the purchase.

'This is an excellent example of the opportunity that exists to buy high-quality shopping centres in Northern Italy at a yield at least 100 bps higher than for similar properties in France and Sweden,' the company said in a statement on Friday. Yields are, however, expected to compress for the best properties in the country when the current speculative bond yield increases have subsided, it added.

The acquisition marks Eurocommercial's fourth shopping centre purchase in the wealthy region of Lombardy and its tenth in Northern Italy as a whole. The Cremona centre provides potential for the creation of further value through extending the gallery, enhancing the tenant mix and improving access to the centre.

The acquisition is expected to complete by the end of September, bringing Eurocommercial's investment in Northern Italy to 41% of the portfolio with France and Sweden at 35% and 24% respectively.

The Amsterdam-listed retail specialist has reported nearly EUR 131 mln in net property income in the year to end-June 2011, up 8.8% on the same period a year before. Like-for-like rents rose by 3.8% over the past 12 months, driven by a 5.2% growth in the Italian portfolio, which showed an average rental increase of 5.2%.

Values went up 3.7% across the portfolio, led by increases in the French assets (6.2%). Direct investment result totalled EUR 77 mln in the past 12 months, up 9.8% from EUR 70.0 mln for the previous corresponding period.