Unibail-Rodamco announces that it has signed an agreement with Perella Weinberg Real Estate Fund I (PWREF) to acquire a 51% stake in the holding company owning 90.4% of mfi AG, Germany's second largest shopping center operator, investor and developer. In addition, the Group has agreed to acquire from PWREF 50% of Ruhr-Park, one of the largest shopping centers in Germany.
The transaction
The total value of underlying real estate assets within the scope of the transaction amounts to 1.5 billion, to which should be added an estimated development pipeline of 530 million. It encompasses 10 standing and future shopping centers, representing 608,291 m².
The total purchase price paid by Unibail-Rodamco for its equity participation in the transaction amounts to 383 million to be paid in two installments: 316 million upon closing and 67 million as of June 30, 2014.
The transaction includes:
The acquisition of a 51% stake in the holding company, which holds 90.4% of mfi AG, for 297 million. The total enterprise value of mfi AG amounts to 1.1 billion, corresponding to a NIY of 5.5% and an average price per m² of 4,636 per m² for the five standing assets
The acquisition of a 50% stake in the Ruhr-Park shopping center, for 86 million, representing a 100% asset value of 380 Mn. This reflects a NIY2 of 4.8% and an average price per m² of 3,435 per m².
The agreement signed with PWREF provides:
A put option for PWREF on all of its 49% stake from July 1, 2014 until March 31, 2017 at a fixed price of 288 million
A right of first offer for both shareholders
A carried-interest for Unibail-Rodamco at PWREFexit, depending upon value creation over the period.
Unibail-Rodamco and PWREF also agreed to work in partnership for future investments in Germany with the ambition to create a major player in the shopping center segment:
Future shopping center developments to be exclusively performed by jointly controlled mfi AG
mfi AG to act as exclusive property manager for future standing assets acquired
Future acquisitions of standing shopping centers or development projects to be done by mfi AG or directly by Unibail-Rodamco and PW Real Estate funds.
Unibail-Rodamco and PWREF will have joint control of mfi AG. Unibail-Rodamco will have the option to gain full control of mfi AG between June 30, 2014 and January 1, 2015 through change in governance.
Why Germany?
Germany has the highest GDP in the Eurozone with a 60 bps per annum growth overpeformance since 2005. The German economy benefits from strong fundamentals with low household indebtedness, low unemployment and expected wage growth which are expected to drive consumption growth.
The German market is one of the most sought after markets for retailers and offers one of the lowest shopping center density in Europe with 130 m² GLA per 1,000 inhabitants compared to 249 m² GLA[5] per 1,000 inhabitants on average in Europe.
In total, the transaction involves 1.3 million m². The portfolio includes two of the five largest shopping centers in Germany, with 7 standing assets or development projects out of 10 being over 40,000 m². Four out of the six standing assets attract between 8-14 million visits per year.
The transactions are expected to close during the third quarter of 2012, subject to confirmatory due-diligence and customary closing conditions. The mfi AG and Ruhr-Park acquisitions are expected to be immediately accretive to the Group's recurring net earnings per share. They will be initially consolidated under the equity method. Unibail-Rodamco will finance the acquisitions from existing bank facilities.
Guillaume Poitrinal, Chairman of the Management Board and CEO of Unibail-Rodamco, said: "This transaction represents an exceptional opportunity to penetrate one of the largest and most attractive property markets in Europe. The synergies between mfi AG's growing German portfolio and great management skills and Unibail-Rodamco's know-how and international presence should deliver outstanding r
