Prelios repositions its German unit as active property manager

Italian listed property services firm Prelios is seeking to reposition itself as an active property and asset manager in Germany following the restructuring of its portfolio, Martin Mörl, CEO of Prelios Germany told PropertyEU.

The company is currently engaged in a major sell-off of its Karstadt assets acquired at the peak of the market together with other members of the Highstreet consortium. So far, 54 department store assets have been sold, mainly by buyers with a management and development arm, Mörl noted. ‘There will be opportunities to work together with new buyers who need to reduce the space Karstadt is using or fill vacant spaces.’

The number of potential investors is increasing, he added. ‘We’re seeing interest from local German and foreign investors. International investors have definitely come back, that has been a big change in the past three years. There’s now a huge variety of investors.’

Beside money from the UK, Austrian capital is also a case in point, he said. ‘That is a country where a lot of pension money is being collected and flowing to Germany. Some larger Austrian investors are targeting A locations in German cities..’

EXITING CO-INVESTMENTS
Prelios has been engaged in a major restructuring of its activities since the outbreak of the global financial crisis. Its current strategy focuses on the provision of asset and property management services for third parties and the progressive disposal of its co-investment activities. As part of this strategy, the Milan-listed property firm is looking to exit all its co-investments in the next two years. In Italy, it is also active in fund management and in credit servicing.

In December last year, the Highstreet consortium, which includes Prelios, Goldman Sachs’ Whitehall funds, Deutsche Asset & Wealth Management, Generali and the Italian Borletti group, sold the Karstadt department store on Berlin's Hermannplatz to London-based investor Meyer Bergman. The Highstreet consortium with Hamburg-based Prelios as asset manager sold 28 assets in 2013 valued at some €1.3 bn, Mörl said. ‘We now have 37 assets left worth some €1.4 bn. The restructuring is going according to plan.’

Earlier this year, Prelios announced the sale of a package of 18,000 apartments in northern Germany which it owned via Solaia Real Estate, a joint venture an investment fund managed by Deutsche Asset & Wealth Management, to Austrian-based CEE investor Immofinanz. The price tag of the residential portfolio, which provides a total of 1.09 million m2 of lettable space with a vacancy rate of 2.3%, was put at €917 mln, reflecting a value per m2 of €819 and a gross yield of 7.6%.

Prelios has already built up a solid reputation as a a centre and property manager in Germany, Mörl maintained. ‘We manage almost all of the schemes that we have developed and are active centre managers. With the exception of the Highstreet portfolio (the Karstadt assets, ed.), we have been involved in every refurbishment and extension of space in our retail portfolio. This is where we come from and that is where we want to offer more.’

In 2003-04, the company was involved in the repositioning of an empty department store which Mörl views as a prototype: ‘Bahnhof Altona Shopping in Hamburg was one of the first redevelopments of a department store in Germany. We’re still managing this one.’

Another major positioning project that Prelios has worked on is the Hamburg-based Mercado shopping centre that predecessor company Pirelli Real Estate and Morgan Stanley Real Estate Investing sold to German open-ended fund manager Union Investment in 2009. Following the renovation of the adjoining Altona railway station, the 24,000 m2 centre was positioned as a locally oriented centre incorporating a market for day-to-day needs. Stone was used instead of marble, iron instead of chrome and instead of a consumer palace with top-of-the-range boutiques and design studios, the heart of Mercado is the 900 m² Market Hall on the ground floor, with over 30 stalls. ‘It has a very individual feel to it,’ Mörl noted.