German retail to stay resilient - Treveria

Treveria, the German-focused retail real estate investment company, has said that that it believes the German retail sector should remain more resilient and less volatile than in the UK.

'Moreover, we believe that our diversified portfolio which is spread across over 200 separate German towns and cities and is principally made up of retailers selling everyday goods and essentials rather than premium or luxury brands, should be better positioned to weather these more difficult market conditions,' the AIM-listed company said in a trading update.

Treveria was formerly known as Dawnay Day Treveria but severed its links when Dawnay Day went bust. Treveria confirmed that it completed EUR 76.2 mln of property sales in the fourth quarter of 2008. A further EUR 3 mln of sales are expected to complete within the first quarter of 2009.

There have been no further sales notarised since 29 September 2008. 'Market conditions have become more difficult in the last four months with a disconnect between the level at which potential vendors are willing to sell and that which purchasers are able to structure acquisitions,' Treveria said.

The company’s portfolio of 450 properties was valued in excess of EUR 2.2 bn at end-June 2008, with rental income of EUR 160 mln per annum. An update of the valuation by DTZ Debenham Tie Leung will be published with the group's preliminary results on 2 April.

Underlining its tight financial position, Treveria said it first Deutsche/Citibank credit facility and its Eurohypo facility are in a 'cash trap', whereby surplus cash from the underlying assets after the payment of interest remains within each ring-fenced facility and is not available for other purposes.

The remaining three facilities are not in a cash trap although Treveria said the loan-to-value covenants are likely to come under 'continued pressure' as new valuations are obtained.