PGGM JV acquires German retail portfolio for €350m

Dutch pension giant PGGM has teamed up with European fund manager Rockspring and Belgian insurer AG to acquire a portfolio of German retail properties for €350 mln.

The portfolio, 92% of which is located in western Germany, represents the largest transaction of its type in Germany for five years. It consists of 23 large out-of-town food-anchored big box retail parks, delivering a total lettable area of 275,000 m2 and an annual rent of €28 mln.

The vendor was a joint venture between Capital & Regional and Ares Management.

Metro Group, which owns the 'Real,-' hypermarket brand, is one of the main tenants, alongside REWE, Kaufland, Edeka and Globus. The portfolio is 98% occupied with a weighted average unexpired lease term of 6.9 years.

The acquisition was undertaken by Rockspring on behalf of Dutch pension fund manager PGGM, and by AG Real Estate on behalf of Belgium's AG Insurance and the Rockspring German Retail Box Fund (RGRBF). The deal marks the first time that Rockspring has brought multiple investors together for such a transaction. The initial loan-to-value ratio is 40%.

The transaction extends Rockspring’s relationship with 'Real,-', Germany’s biggest out-of-town food retailer, which operates across seven of the 23 locations, and together with existing ownerships makes Rockspring one of its principal partners and store owners.

The properties will be managed by Prime Management Düsseldorf.

COMMENT
Paul Hampton, partner at Rockspring, said, 'This is a significant transaction for Rockspring, both in terms of its size and our success in bringing two of Europe’s largest and most experienced investors in a club deal together alongside RGRBF. We believe this reflects our successful 10-year track record in the German retail market and the reputation of Prime Management Düsseldorf, our best in class asset management platform partner.

Stuart Reid, partner at Rockspring in charge of Germany, commented, 'The relationship that we were able to form with the sellers of this off-market portfolio in such a competitive marketplace, combined with the quality of equity supporting our offer, was instrumental in securing this acquisition. The transaction brings Rockspring’s AUM in German and Swiss retail warehousing today to in excess of €1.5 bn.'

Thijs van Gelder, senior investment manager at PGGM, added: '2015 marks the 10th year of PGGM investing in German out-of-town retail with Rockspring, which has been a successful partnership for us. This is an attractive, value-add portfolio with longevity, a stable cashflow and, importantly, with defined actions to improve the portfolio’s sustainability performance. This partnership is in line with our ambition to have a high degree of control over the investments we make on behalf of our clients'.

LONDON OFFICES
At end-January PGGM and UK financial group Legal & General Capital announced the launch of a London office joint venture partnership and its first deal, the acquisition of 72 Broadwick Street in Soho for £67 mln (€90 mln). The joint venture has an initial investment allocation of £375 mln.

For the latest on the German market, don't miss PropertyEU's German Investment Briefing in London on 9 April.[/1]