Union Investment takes control of €570m Prague mall

Union Investment has given a major vote of confidence to the Czech retail market with the acquisition of a majority stake in Prague's Palladium shopping centre in a deal valuing the asset at €570 mln.

Union Investment, which is making the purchase for its €10 bn UniImmo: Deutschland open-ended real estate fund, said the transaction is taking the form of a share deal with a private equity client of Hannover Leasing.

Union is believed to have emerged ahead of Allianz Real Estate and Atrium European Real Estate in the bid to acquire the mall, which has a gross area of 115,000 m2. The transaction is understood to be one of the largest single asset deals ever closed in the Czech market. It is being financed by banks Bayern LB and Helaba.

Hannover Leasing bought the mall on completion in October 2007 for €535 mln.

Palladium is the largest shopping centre in Prague's central retail district. The scheme is almost fully let and includes 41,000 m2 of net retail space, 18,000 m2 of offices, and 860 parking spaces. The scheme attracted some 16 million visitors in 2014.

Union Investment was advised by CBRE. Katarína Brydone, associate director, Capital Markets for CBRE said: '2015 is set to be strong year for shopping centre investment in the Czech Republic, with several large deals that originated in 2014 closing in the next few months, and further assets coming to the market later this year. Including Palladium, we currently tracking over €1 bn of shopping centre investments for 2015 - deals either already closed, in negotiations, or known to be coming to market. This would be more than three times 2014 shopping centre volumes for the Czech Republic.'

'Successful centre management has delivered an attractive tenant and sector mix in the retail space, combined with good occupancy levels in the office space, which means we can expect positive long-term cash flow and a high level of income stability,' commented Henrike Waldburg, head of Shopping Centre Investment Management at Union Investment Real Estate.

Following the acquisition, Union Investment's portfolio of European shopping centres comprises 41 properties with a total value of €6.45 bn. Based on real estate asset values, approximately 40% of Union Investment's retail assets are currently located outside Germany.

UniImmo: Deutschland's retail portfolio includes the Alexa mall in Berlin, the Kröpcke Centre in Hanover, Riem Arcades in Munich and Manufaktura in Lódz.

'This was just the right time to take advantage of the enormous interest in European core real estate that we see at present. Shopping centres in absolutely prime locations and with very high occupancy levels are very scarce in top European cities,' commented Andreas Ahlmann, managing director of Hannover Leasing.