Neinver strengthens position ahead of market consolidation

Spanish outlet operator Neinver aims to boost its presence in key European markets as consolidation of the general retail outlet industry is expected to gather momentum in the year ahead, according to chief financial officer Carlos Gonzalez.

Neinver has recently taken over MAB Development’s 50% stake in the joint venture the two companies launched in 2010 for the development of designer outlet centres in Germany, France and the Netherlands.

Under the deal, Neinver has taken over all ongoing projects and the pipeline in the three countries.

Gonzalez told PropertyEU that the acquisition was a result of the decision by MAB’s parent group Rabo Real Estate to phase out its commercial real estate development division. The purchase is also in line with the Spanish company’s strategy of becoming the leading outlet operator in Europe’s key growth markets such as France, Germany and the Netherlands, he added.

Neinver is Europe’s second-largest operator of outlet centres, managing 15 centres with a total of 311,600 m2 of GLA under The Style Outlets and Factory brands. The group has operations in Spain, Italy, France, Germany, Portugal and Poland.

PEU: Rabo Real Estate’s decision to phase out its commercial real estate unit gave Neinver limited options regarding the continuation of their joint venture in Germany, France and the Netherlands. What were the alternatives considered?
Gonzalez: Neinver signed a joint venture with MAB Development in 2010 to cooperate in the development of Factory Outlet Centres in France and Germany. At the time we thought we were establishing a long-term cooperation. The official announcement of Rabo Real Estate Group in May 2013 to sell off its commercial real estate development activities changed the situation completely. We considered several alternatives and even looked for a new partner, but at the time there was little appetite for development ventures and a lot of talk about troubled Spanish companies. In that environment, we decided to go ahead with the acquisition of 100% of the joint venture. In any case, this did not pose a challenge for the business given that MAB had always been the financial partner while we were the operating partner with the retail development expertise.

PEU: Can you comment on the rationale behind the acquisition?
Gonzalez: The acquisition reinforces Neinver’s internationalisation plan and is part of our strategy to become the leading outlet operator in Europe. We have the skills and the team to carry on the development of the projects we initiated under the JV.

PEU: Would you consider joining forces with a new partner now that the investment market has recovered?

Gonzalez: We will see, we are not saying ‘no’ forever. We are a family owned company, so we will need financing partners in any case for the future. However, I reckon it will probably not be a single partner for the entire portfolio, it should be more than one or we could decide to team up with a partner on an asset by asset basis.

PEU: Can you disclose the financial details of the MAB takeover?

Gonzalez: We have evaluated the business on an asset-by-asset basis. The details are confidential, but I can say that it was a price which made sense for both parties. It was also a full equity purchase.

PEU: What does this acquisition mean for Neinver from a financial and operational point of view?
Gonzalez: This operation represents an important financial effort for the company. However, we continue to believe that implementing the projects we have initiated under the JV is a safe bet.

PEU: What are the assets, projects and the development sites included in the joint venture?
Gonzalez: Under the joint venture, Neinver and MAB opened Roppenheim The Style Outlets in the Alsace region of France near the German border in April 2012. We have one project close to Amsterdam, a 18,000 m2 retail destination with 100 stores, plus 1,000 m2 of leisure accommodation, two development projects in Germany, two outlet centres in Werl and in Arthal, one site with building permit in place in France as well as a number of other developments currently under study. France, Germany and the Netherlands are promising markets and we know that there is still room for good outlet projects. These are the core markets where we want to consolidate our position as a key operator, not only as a developer but also as an asset manager. We already manage the Irus European Retail Property closed-end fund, which was launched in 2007 and currently has more than €1 bn of assets in Germany, Spain, Italy, Poland, and Portugal.

PEU: What is the outlook of the retail outlet sector at the moment?
Gonzalez: The outlet concept has proved its success over the past years both among operators and investors. Our strong financial results show that it is a resilient market with strong potential. Institutions are starting to consider retail outlets no longer as a marginal sector, but as an asset class per se. New players, institutional and financial ones, are having a look at this market segment, which is a promising sign. The sector is quite fragmented at the moment and I believe it is headed for some consolidation, so we need to strengthen our market position and capture the opportunities that the market offers. It is not easy to develop new outlet projects in Europe mostly because the license process is very slow. In order to grow, we are studying new opportunities and evaluating assets that, with the right manager, could see their value increase in the future.

Virna Asara
Correspondent Southern Europe