Corestate Capital Group and Sistema Capital Partners have formed a joint venture targeting opportunities in Germany. The partners have secured four high street retail properties in mid-sized cities on behalf of a Sistema-led club of investors for a total of more than €120m, with debt financing more than 60% of the investments.
The four properties acquired from various vendors are located on the pedestrianised prime shopping streets of Greater Hamburg, Bremerhaven, Paderborn and Halle. Tenants occupying the total of 60,000m2 available in the buildings include H&M, Saturn, Esprit, Depot and the municipality of Bremerhaven, while 6% of the space is vacant.
Marjorie Brabet-Friel, SCP’s chief executive officer, said: “Our international investment programme is gaining momentum with almost €250 million of high street assets acquired with co-investors in Germany. Partnering with best-in-class investment and asset managers such as Corestate is how we source and actively manage the portfolio to generate attractive returns for Sistema and its co-investors. We will be taking a similar approach in other major international real estate markets, where our investors are looking to deploy their capital.”
SCP invests Sistema’s own capital in domestic and international real estate to seize opportunities swiftly and secure a pipeline of real estate investments. The partners introduce the purchases subsequently to other like-minded institutional and high net-worth investors from around the world through a club deal structure that provides them with hands-on control of the assets. Corestate is also co-investing in the German assets.
Sascha Wilhelm, chief executive officer of Corestate, said: “The strength and investment expertise of the Sistema Group is a perfect complement to the Corestate team’s investment and asset management skills and in-depth knowledge of the German market. The four acquired high street assets typify the opportunities that the joint venture is targeting because they present plenty of angles to enhance their attractive yields through active asset management. We still see a lot of such opportunities in the German market and therefore plan to grow our portfolio significantly within the next two to three years.”
The joint venture is assembling a substantial portfolio of high quality high street properties on the principal shopping streets of mid-sized cities in Germany. Institutional investors are deterred from investing in these properties because of their small transaction size relative to equivalent assets with similar tenants in the Big Seven cities. The reduced liquidity for these properties results in a pricing gap that SCP aims to close by building a portfolio of scale.
