Klepierre, ABP buy top Scandinavian mall owner

Listed French real estate group Klepierre and Dutch pension fund ABP have jointly acquired Steen & Strom, the largest shopping centre owner in the Scandinavia region, for a total investment volume of EUR 2.7bn - the biggest European property investment deal so far this year.

The French retail specialist acquired 56.1% of Steen & Strom's capital, and ABP bought 43.9%. The partners said Steen & Strom, which employs 400 people, will continue as a separate legal entity with its existing management. The acquisition is expected to close in the second half of 2008 subject to regulatory approval.

Patrick Kanters, managing director for global real estate at ABP's investment manager, APG, said: 'It is very rare to be able to get substantial exposure to one of Europe's leading-fully integrated shopping centre platforms.'

Klepierre said the acquisition was part of its plans to create 'Europe's leading shopping centre and retail owner, developer and manager and to diversify its economic base'. ABP and Klepierre said that the Steen & Strom deal gave them critical mass in the Scandinavia shopping centre market and they would use the firm as their main mall platform in the Nordic region to make further acquisitions.

Klepierre has 240 shopping centres totalling 2.1 million m² of lettable area in 10 countries in its retail portfolio. Shopping centres accounts for EUR 9.7bn of the value of the group's property holdings. Smaller retail units make up EUR 500 mln and the group's office holdings in and around Paris are valued at EUR 1.1bn. Steen & Strom own 30 shopping centers in Norway, Sweden, and Denmark with a total value of EUR 2.5bn. Net rents for the full year are expected to reach EUR 154mln. The company also has a pipeline of development projects in its Scandinavian portfolio worth more than EUR 1bn. Steen & Strom manages a further 26 shopping centres on behalf of third parties in Norway and Denmark.

Klepierre's ambition to become the 'leading' shopping centre owner, manager and developer has some way to go. The current holder of that crown is French-Dutch combine Unibail Rodamco which operates in five regions: France, Spain, the Nordics, Benelux and Central Europe. While Unibail-Rodamco owns fewer shopping centres - 97 compared to Klepierre's 240 - shopping centres account for over 70% of the value of Unibail-Rodamco's EUR 26.1bn portfolio of assets as the firm owns 11 of the top 25 shopping centres in Europe ranked by visits per year.

The announcement of the Steen & Strom acquisition coincided with the publication of Klepierre’s results for the first six months of 2008. Klepierre said the economic slowdown had only a minor impact on its operations and the operations of its outsourcing specialist Klemurs.

Klepierre reported net income of EUR 99mln compared to almost EUR 116mln in the same period last year. Lease income in the first half of 2008 came to EUR 329mln, up from almost EUR 267mln in the first half of 2007. Last week, Unibail-Rodamco reported a net profit of EUR 394mln for the first six months of 2008. Rental income increased just over 8% to EUR 599mln. Earnings per share rose 6.9% to EUR 4.33.