PREI, Qatari bank acquire 16-property retail portfolio in Germany

Pramerica Real Estate Investors and Qatar’s investment bank QInvest have acquired a portfolio of 16 retail properties located across Germany through a newly formed joint venture.

The vendors are Hahn Gruppe and the Indigo Invest family office, which bought the package at end-2012 from a Hahn closed-end fund for a bargain price of €140 mln. Since then, the partners have relet the portfolio on long-term leases.

The acquisition includes 16 multi-tenant retail assets anchored by major grocery and home improvement retail outlets, comprising more than 140,000 m2 across Germany. They are 95% leased under 10-year terms and key tenants include some of the largest German retailers. Around 75% of the assets are located in Western Germany (North-Rhine Westphalia (5), Niedersachsen (4), Bavaria (3), Sachsen (2), Baden-Württemberg and Brandenburg).

Pramerica will act as the portfolio and asset manager for the properties.

New partnership
The investment is part of QInvest's investment focus on yielding assets providing long term rental income.

'The transaction provides us with higher yielding exposure with value add upside secured by defensive assets in one of the more robust EU economies,' said Craig Cowie, head of real estate at QInvest. 'We intend offering equity to our shareholders and clients as part of our ongoing initiative to offer value add returns to all stakeholders.'

The investor has entered into an investment agreement with Pramerica on a deal by deal basis to focus on income-generating assets in Continental Europe and the UK. The strategy aims to achieve a yield of 7-8% cash-on-cash, according to Sebastiano Ferrante, head of Germany for Pramerica.

'The acquisition provides investors with access to long-term income returns through strong underlying leases with major German retailers in proven, diversified, regional markets,' said Sebastiano Ferrante, head of Germany for Pramerica. 'We are pleased to partner with QInvest to capitalise on the attractive fundamentals of the German economy and the overall retail investment market.'

With this acquisition, whose financial details were not disclosed, Pramerica now manages over €700 mln of German retail assets on behalf of its investors.

'Retail parks, hyper markets and other food-anchored assets are increasingly popular with international investors because they provide a secure rental income. For this strategy, Germany is particularly appealing because base need retail is required to cater for a population that is widely spread across the country and it is not under pressure from online retailing. I expect a lot of big portfolios will trade before the end of the year,' added Ferrante.

QInvest’s real estate unit invests opportunistically in both junior financing and equity for assets in the US, Western Europe and the UK. The areas of focus are sector agnostic and include core, value add and greenfield developments.

Pramerica Real Estate Investors is the global real estate investment business of Prudential Financial, based in the US.

Colliers and JLL brokered the deal; DLA Piper provided legal advice.