Schroder Real Estate has acquired a DIY centre in Brunswick (Braunschweig), let on a long lease to Hornbach, for one of its existing funds from M7 Real Estate. The purchase price for the transaction, carried out as a share deal, was €30m.
The property, constructed in 2004, is located in a retail district in the south of Brunswick. The asset benefits from good road access, with fast connections to the A391 and A39 motorways. The property has a total lettable area of around 18,000 m², with the main sales area of ca. 11,400 m², a 5,000 m² garden centre, a building materials centre of around 1,600 m² and over 500 parking spaces. The property is let to German DIY chain, Hornbach on a ca. 14-year lease.
Nils Heetmeyer, Investment Director of Schroder Real Estate KVG, commented: "We are confident in the prospects for DIY centres as an asset class. In our view, the risk of DIY centres being displaced by online trading is much lower than for other retail sectors. Retailers such as Hornbach are succeeding in deftly combining bricks-and-mortar retailing with online trading. This results in an attractive risk/return profile from the investors' viewpoint."
M7 became asset manager of the property when it acquired the DIY centre in 2015 on behalf of the M7 European Real Estate Investment Partners (M7 EREIP I) fund.
Alyssa Huse, Managing Director of M7 in Germany, said: "During our two-year ownership of the largest Hornbach DIY centre in northern Germany, we have succeeded in negotiating an early12-year lease extension with Hornbach and thereby generating an attractive investment product. This sale demonstrates the value of our asset management activity and is in line with our strategy of delivering returns for the shareholders of our M7 EREIP I fund.”