Segro in biggest sale-and-leaseback in Continental Europe

UK real estate investment trust Segro (formerly known as Slough Estates) has announced the sale and leaseback from mail order and online retailer Neckermann of a major office and distribution centre in Frankfurt for EUR 197 mln, including all acquisition costs. Neckermann is a member of the Arcandor group, which includes Thomas Cook, Karstadt and Quelle, and was known as KarstadtQuelle until its change of name on 1 July. The transaction is Segro's largest so far in Continental Europe, and follows its EUR 163 mln acquisition early last year of a major logistics portfolio and landbank from KarstadtQuelle in another sale-and-leaseback transaction.

The site has a built area in excess of 310,000 m2, including 86,000 m² of office space, warehousing, business space, a large data centre and some small retail units. The majority of the property is occupied on leases of 10 years or more by Neckermann, which Arcandor plans to demerge this year. The remaining space, mostly offices that have been let to other Arcandor group companies or to Neckermann's contractors, is leased on shorter terms and so represents a refurbishment/redevelopment opportunity in the medium term. Segro is planning to enhance the value of the site by developing 6,000 m² of business space in the short term and refurbishing and redeveloping additional areas as they are handed back.

'This major purchase will provide us with both an attractive income yield and future development opportunities,' said Walter Hens, Segro's managing director for Continental Europe. 'It underlines our commitment to major expansion in Europe and particularly in Germany, where we see very positive economic signs.'