European retail fund specialist and asset manager Pradera is planning to open an office in Germany following a tie-up with multi-family office LJ Partnership aimed at expanding the business.
‘The opening of a German office is a natural progression for our business,' Pradera's managing director David Fletcher told PropertyEU. 'We see strong investor appetite for core plus retail product in this country, where we have already acquired two assets and we are in due diligence on further properties.’
Earlier this year, the Pradera Open-Ended Retail Fund (POERF) struck a deal with Union Investment to acquire the Äppelallee-Center in Germany, a hybrid retail park/shopping centre in Wiesbaden for €82 mln.
The move follows the announcement last month that Pradera had sold a 49.9% share in the €2 bn business to LJ Partnership for an undisclosed amount. Both sides said LJ Partnership's significant minority stake will help drive substantial growth at Pradera and lead to entry into new retail property segments and markets.
‘This investment marks the end of a process of restructuring of the ownership of Pradera and it means that we now have a world-class shareholder involved in the business who is outside the group and active in different areas of the real estate market,’ commented co-founder and chairman Colin Campbell, who still holds the majority of 50.1% in the Pradera holding company through the Colin Campbell Family Trust. The holding group is the majority owner of the Pradera business, with a stake of roughly 70%, while the company’s management team holds the remaining shares.
LJ Partnership’s investment comes a year after an internal management buyout which saw a company controlled by the Colin Campbell Family Trust acquire co-founder Paul Whight's controlling stake in Pradera. That investment was financed partly in cash and partly with vendor financing from mr Whight.
‘The partnership with LJ allows the Colin Campbell Family Trust to pay back that financing,’ Campbell said. He added: ‘We also considered refinancing it with cheaper debt from a bank but in the end we decided to go ahead with finding another shareholder. We were in the fortunate position to choose which shareholder as there were three companies altogether interested in investing in Pradera, and we chose LJ for their institutional connections with the family office world, to which we almost have no exposure today.’
LJ Partnership is a privately held multi-family office that operates globally to manage the investments of individuals, family offices, foundations and charities. Its largest shareholders are family offices and businesses from Hong Kong and Latin America. In Europe, the firm has predominantly been active in the UK although it also owns some student housing in Germany and some residential assets in Barcelona, Spain. ‘They have invested in Pradera because they liked our retail sector focus, our strategy, our team. This is a way for us to grow,’ commented Pradera's managing director David Fletcher.
Andrew Williams, CEO of LJ Partnership, said the collaboration will broaden and deepen the group’s European platform, enhancing the group’s local presence in major European markets. ‘It will enable us to bring a broader range of investment opportunities to the select group of individuals and families that we represent.'
NEW GEOGRAPHIES
The partnership will take Pradera into new segments of the retail market and over time into new geographies, according to Fletcher. 'This [stake] will take the business into the family office market, supplementing, but not competing with, our historic strong institutional client base,' he said.
Looking forward, Fletcher said the company is also preparing the launch of a new investment vehicle. ‘We are at the early stage of product development, still considering the fund profile and trying to identify the specific geographies. We would like the fund to focus on the markets where we have been most successful, Spain, Italy and Central Europe,’ he added.
It would be the first new Pradera fund in a number of years, as the group struggled with equity raising in the recent past. ‘It is almost impossible to raise a new fund while the company is considered to be for sale or in restructuring,’ admitted Campbell.
In April the company lost two of its managers to Savills Investment Management, which hired Neil Varnham and Richard Gore as executive directors.
Pradera manages a €2 bn portfolio comprising over 40 shopping centres and retail parks in the UK, Spain, Italy, Greece, Germany, Poland, the Czech Republic and Turkey.
