HGA Capital Grundbesitz und Anlage GmbH has started the syndication of its HGA/City-Fund Hanover fund. The fund is investing in the Ernst-August-Galerie, a shopping center located in the heart of the Hanover CBD, which is to be opened in 2008. It is being planned and managed by ECE.
The forecast initial payout stands at around 6% p.a. after tax. Investors can acquire shares in amounts starting at €10,000 plus a agio of 5%. The fund management company, which will be organized as a limited partnership, will hold an 80% stake in the property company also organized as a limited partnership, which will build and lease the shopping center. The remaining shares will be acquired by the Otto family, which owns ECE Group. This involves an investment of some €230 million for the property company. The total fund volume of around €93 million will be provided in full in the form of equity capital.
Collaboration with strong partners
The ECE Group will be responsible for leasing and managing the Ernst-August-Galerie. HGA Capital is already collaborating with ECE on shopping centers in Central Europe. For instance, ECE is responsible for leasing and managing the fund property of the HGA/Central Europe I Fund in Hungary, the HGA/Central Europe II Fund in the Czech Republic and the HGA/Central Europe III Fund in Poland. All the funds have so far performed as projected or better.
HGA/City-Fund Hanover is being co-syndicated by HIH Hamburgische Immobilien Handlung GmbH and Sparkasse Hannover (savings bank), among others, both of which have issued underwriting guarantees of €15 million each. HIH is also acting as a co-initiator on behalf of its customers. With its 140 employees, the HIH Group, a member of the Warburg Group, covers the entire gamut of real estate services ranging from project development to property management. Sparkasse Hannover is one of the five largest savings banks in Germany with total assets of €13.3 billion and roughly 2,800 employees.
Ernst-August-Galerie filling a gap in the market
Ernst-August-Galerie is located directly adjacent to the Hanover central railway station only 150 meters away from the pedestrian precinct and has a floor area of some 40,000 m² available for lease, including 30,000 m² of retail space, as well as parking for 1,100 cars. It also provides very good links to the main inner-city traffic junction and public transportation.
Once it is completed, the Ernst-August-Galerie is expected to be the premier shopping center in the heart of Hanover, the capital of the German state of Lower Saxony. "Given its large floor area and superb location, we expect the Ernst-August-Galerie to assume a dominant market position within a short space of time and to become a big attraction even beyond Hanover," says Dr. Joachim Seeler, managing director of HGA Capital. "The Ernst-August-Galerie will thus fill a gap in the market and provide investors with excellent opportunities."
Above-average purchasing power
Hanover is the capital of Lower Saxony and the most important retail location in North Germany after Hamburg, with a catchment area comprising 1.6 million inhabitants and a large number of visitors. "The people of Hanover enjoy above-average purchasing power compared with Germany as a whole. In addition, more purchasing power is entering Hannover than leaving it, a development that is clearly reflected in the city's retail trade centrality ratio of 134.6," explains Seeler.
Two years ahead of completion, almost two thirds of the floor area of the planned shopping center have already been leased. Interest from further potential large-scale tenants is strong thanks to the limited availability of space in Hanover's CBD. The Ernst-August-Galerie will offer a varied mixture covering clothing, sports, books and food retail outlets, supplemented by restaurants and cafes as well as retail-related services.
Source: HGA Capital Grundbesitz und Anlage GmbH (HGA Capital)