Rockspring Property Investment Managers LLP (“Rockspring”) on behalf of TransEuropean Property Limited Partnership VI (“TEP VI” or the “Fund”), announces that it has acquired the Flora-Park shopping centre in Magdeburg, which is c.150km west of Berlin, for €117 million from Chenavari in an off-market transaction.
One of the largest shopping centres in the state of Saxony-Anhalt, Flora-Park comprises 66,500 sqm of retail space across 90 units and has 2,700 car parking spaces. The anchor tenants are a Real hypermarket, a Roller furniture store and a 2,400 sqm TK Maxx, while other tenants include Medimax, C&A, Deichmann and Aldi.
The centre, which was originally constructed in 1992, is currently undergoing a full refurbishment which was commenced by the vendor and will be completed by Rockspring in 2017. The total capital cost of the renovations, once completed, will be in the region of €25 million. The refurbishment will be managed by Rockspring’s Berlin office, which also originated the transaction and will co-ordinate the final lettings on completion of the improvement works.
Estama was mandated exclusively as sales agent on behalf of the vendors.
Stuart Reid, Rockspring Partner in charge of Germany said:
“Following detailed research into the former East Germany a number of years ago, we identified the cities that were most likely to benefit from socio-economic growth and the retail schemes with the most potential within these cities. Over the last five years, as a result of our strong expertise on the ground in Germany, we have had the opportunity to acquire assets in the better performing locations in cities which are now benefitting from this economic and population growth. We are pleased to have added Flora-Park to our portfolio and to have the opportunity to complete the repositioning.”
Ulf Christiansen, head of acquisitions at Rockspring in Germany said:
“We are delighted to have identified this opportunity through our long-term exposure to the German retail investment market and our strong network and to have successfully completed it with strong commitment from buyer and seller. The refurbishment that is underway, the resulting upgrade of the tenant base and strengthening of the income stream, means that the property is fully in line with our “income and growth” strategy for TEP VI.”
Christian Bodtke, Investment Executive at Estama said:
“Flora Park is a dominant shopping-centre in the local market of Magdeburg. Interest in the property was expectedly high given the current market situation with record demand for this type of product. With Rockspring we found a partner that understood the value of this asset and had the competence to take over an ongoing refurbishment programme commenced by our client.”
Flora-Park is the tenth shopping centre that Rockspring has acquired on behalf of its portfolio of funds in the former East Germany since 2011, bringing its total investment in the region to c.€440 million. Rockspring now has over €2 billion of assets under management across Germany and Switzerland, including approximately 100 retail properties.
TEP VI held a final close in July 2016 and with €430 million of equity as well as leverage of up to 55%, it has a total expected firepower of €1.0 billion. To date, the Fund has committed in excess of €680 million across nine projects across Europe. The fund has a diversified pan-European investment programme with a focus on office, retail, residential and industrial properties in large metropolitan areas of core Western Europe (including the UK). Launched in 2016, the strategy is to assemble a cash-flow generative portfolio that can be aggressively ‘managed to core’, utilising the firm’s Europe-wide platform and, more specifically, its hands-on asset management or operator-style approach. The programme can be classified as ‘value-add’ in terms of risk, albeit income is expected to be a key driver of the 15% pa target return[1].
The Estama Investment Team acting on the sale of Flora Park has transacted as exclusively appointed sales agent in excess of € 1 billion in the last four years on behalf of a number of well-known investors. Estama is an asset, property and investment manager with c €4.5 billion of assets under management in Germany. Estama have 11 offices across Germany with 160 employees.
[1] Returns quoted are gross of fees, costs and taxes