The Züblin Immobilien Group is expanding its European holdings with the purchase of a diversified retail portfolio in Germany worth a total of CHF 300 million (€ 195 million).
The annual rental income of CHF 25 million (€ 16,3 million) is equivalent to a yield of 8.3 percent on the purchase price including charges, thus producing an operating return on capital of over 10 percent. This transaction increases operating profit by about 10 percent per share.
Attractive portfolio with best possible timing
Taking a countercyclical approach, Züblin is capitalizing on the weakness of the German market. The purchase of this portfolio marks the next step in Züblin´s expansion plans. The rental income as a percentage of the purchase price corresponds to a yield of 8.3 percent. The properties are rented mainly on long-term contracts to tenants with an excellent credit rating. The largest tenants include firms such as the Metro Group, Edeka/AVA and H&M.
Diversification of locations and property uses
One of the appealing features of the portfolio is the diversity of locations it offers. Most of the properties are located in northern and western Germany, with over 60 percent of the total in North Rhine-Westfalia and Lower Saxony. 50 percent of the properties are situated in excellent city centre locations of small and medium-size cities, while the other 50 percent are predominantly traditional specialist retail outlets in agglomerations. The average value per property is CHF 13 million (€ 8,5 million).
Financing: convertible bond with mandatory conversion
The portfolio has been acquired with retroactive effect to 1 July 2004. The acquisition is being financed by a mortgage and the company´s available liquidity. Depending on the state of the markets, it is planned to issue a convertible bond for CHF 50 million (€ 32,6 million), with provision for mandatory conversion. Subscription rights of current shareholders are to be maintained. The precise terms will be made public in due course. The shares for this convertible bond are to be secured by the authorized capital which was set aside for the purpose of acquiring real estate. Since the issue of a convertible bond using authorized capital is not explicitly permitted under the Articles of Association, the relevant article is to be amended at an extraordinary General Meeting to be called for 8 October 2004.
Diversified European portfolio of CHF 1.67 billion (€ 1,09 billion)
The purchase of the properties in Germany raises the value of the Züblin Group´s portfolio to CHF 1.67 billion (€ 1,09 billion). The annual rental income will rise from CHF 94 million (€ 61,3 million) to CHF 119 million (€ 77,6 million). In terms of rental income, the proportion of the entire portfolio accounted for by the retail sector increases from 7 to 26 percent.
Source: Züblin Immobilien Holding