German investment firm Patrizia Immobilien has secured its second major retail portfolio in a matter of weeks with the acquisition of 66 properties across Germany from UK REIT Redefine International.
The off-market acquisition was executed within the framework of a combined share and asset deal worth around €205 mln, to be paid in cash. The purchase was made on behalf of an individual mandate of a foreign institutional investor.
According to the vendor, the sale price represents a 10.8% premium to book value. The portfolio generates €12.7 mln of net rents a year reflecting a net initial yield of 5.8% on the sales price and an approximate 8.3% yield on equity.
The so-called Leopart portfolio provide a total lettable area of around 140,000 m2 and is let to well-known food discounters and hypermarket chains such as Edeka, Netto and real, which together account for 85% of the portfolio’s rental income. The Edeka chain alone generates approximately 68% of the total rental income. The remaining average lease term is circa eight years and the vacancy rate is 1.4%.
Closing is expected for the end of the year.
'This opportunistic disposal capitalises on an exceptionally strong investment market and an approximate 11% increase in the value of the Euro relative to Sterling over the investment period,' said Redefine.
The disposal will include the repayment of €86.1 mln of debt facilities, with a weighted average cost of debt of 1.4%, the vendor said. Redefine intends to recycle the disposal proceeds into new investments with a lower leverage than the company’s last reported loan to value of 50%.
The company said it has already identified a number of investment opportunities which are at various stages of due diligence and is currently in exclusive negotiations to acquire a portfolio of high quality assets which, if acquired, would utilise the majority of the disposal proceeds.
Mike Watters, CEO of Redefine International commented: 'We are very pleased to announce this opportunistic disposal which capitalises on an exceptionally strong German investment market. Following the deal, our overall exposure to Germany will decline from 27% to 18% and we anticipate reinvesting the proceeds into the UK, where we are witnessing some particularly attractive investment opportunities.'
'This promising retail portfolio has been secured in our latest off-market transaction, delivering another tailored opportunity for our client base,' said Daniel Herrmann, head of fund Management Retail at Patrizia.
This is the second such off-market retail acquisition announced by Patrizia in the last few weeks. At the end of September, the company announced the €400 mln purchase of an 85-property portfolio in Germany.
The deals have lifted Patrizia’s retail assets under management to more than 600 properties with a value of over €4 bn, more than half of which are food retail assets.
