Capital & Regional plc last week announced the formation of a joint venture with the German property group Hahn AG, one of Germany's leading co-investing property asset managers, to acquire and actively manage out of town retail properties in Germany.
A 110 million portfolio of eight out of town retail centers comprising 68,785 m² has now been assembled by the JV producing a rental income of 8.2 million per annum. The net initial yield for the portfolio is 7%. The portfolio includes properties acquired from the existing portfolio of Hahn funds under management and the tenants include Metro and subsidiaries (including Real), Rewe, Edeka and Decathlon.
The portfolio is to be managed by Hahn AG which will have a 10% share of the joint venture. Hahn AG manages closed end property investment funds specializing in retail property throughout Germany. It was founded in 1982 and has an established track record in the out of town retail sector, currently managing closed end funds with an investment volume of 1.7 billion and 660 million of equity.
It is the intention that the C&R / Hahn joint venture will expand by acquiring similar investment properties in Germany, where the parties see potential in the out of town retail market. They are currently investigating a number of opportunities where their joint management expertise will add value. It is hoped to be able to announce further acquisitions shortly.
The Bank of Scotland has provided senior debt for six of the properties through its Frankfurt office. The remaining two acquisitions were financed by Eurohypo through its Dusseldorf office. The weighted average cost of debt across the portfolio is 3.9%.
Martin Barber, Chief Executive of Capital & Regional, said: "In the Hahn Group we have a partner which has an undisputed track record in managing retail property in Germany. We recognize that property is a local business and have therefore put considerable time and effort to into developing the right management arrangements before investing. We believe that our combined expertise in financing and managing retail property will generate attractive equity investment returns."
Bernhard Schoofs, Chief Executive of the Hahn Group, said: "This joint venture is a significant strategic development for Hahn. To date the Hahn Group has focussed on initiating and managing closed ended property funds. It will now also be an active asset manager of large space retail properties for German and international investors. We look forward to working with our friends at Capital & Regional where we will both benefit from our mutual expertise in retail property investment."
Source: Capital & Regional