OUTLOOK RETAIL: Debt for retail redevelopments is flowing more freely

Financing is becoming more readily available for retail real estate investments and redevelopments, according to Severin Schöttmer, director special property finance at Aareal Bank.

‘We’re seeing increasing liquidity on the banking side in almost all core markets,’ he told PropertyEU's Retail Outlook Briefing at Mapic in Cannes in late November.

Aareal’s focus is on shopping centres and retail parks, in particular stabilised assets and those in need of repositioning, he added. ‘Before the crisis, we did provide direct development financing but we’re not doing that anymore. Now we’re only looking at the redevelopment of existing schemes.’

The German lender focuses on almost all markets in Europe with the exception of Greece and Romania, Schöttmer said. ‘We are open for business in all other markets although competition is strong in the UK and Poland. We are always looking for a niche in cross-border financing, for the right product with the right pricing.’

To remain abreast of the soundness of the assets it finances, Aareal regularly reviews occupancy costs per tenant, Schöttmer said. ‘We need to understand what the trends are, how online sales are developing, rollover profiles, who the first-tier tenants are and what sort of tenants we need to have. We want to have the whole history, how a centre is performing so that we know we are lending on the right centre with the right location and the right tenants.’

In terms of liquidity, the situation is improving in almost all markets, Bas Tiemstra, head of asset management retail EMEA at CBRE Global Investors, confirmed. ‘We’re looking mostly at markets where there will be growth in spending. In some countries spending will be less, but in others like Spain, Poland and Czech Republic it will be better. We will focus quite heavily on these countries.’

After several difficult years in Spain, consumer spending is increasing quite dramatically, he added. ‘This is creating room for us to spend as well. We’re seeing new formats being introduced, but it does depend from market to market.’