Deutsche Konsum REIT (DKR) has sold a portfolio of 14 retail properties to an institutional German real estate investor in the retail segment. The two parties have not disclosed the purchase price.
The properties are spread across various locations in Germany: in Ludwigslust, Guben, Stendal, Hohenmölsen, Aschersleben, Tangerhütte, Eisenhuttenstadt, Seebach, Elsterwerda, Eggesin, Lubz, Lübtheen, Stassfurt and Osterfeld. They include different types of stores, ranging from discount grocers to retail parks, with a total rental area of 72,000m2.
The properties bring in €5.5m in rent each year, with leases lasting an average of 5 more years. Presently, about 6% of the space is vacant. The sale price is approximately 4% lower than the company's official valuation from September 2023.
The ownership transfer, along with any associated benefits and burdens, is expected to be completed by June 2024.
DKR purchased these properties between 2015 and 2022, averaging a 10% initial return on investment. During DKR's ownership, the leases typically had 5.7 years left, and vacancy rates were around 6%. The company collected over €36m in rent and increased the average annual rent by 10%. Currently,
DKR plans to use all the proceeds from the sale to pay off bank loans and some of its maturing bonds. This will significantly improve its loan-to-value ratio by several percentage points. Additionally, DKR is working on selling more properties to refine its real estate holdings further and use the extra cash to optimize its debt situation.
Image source Pexels.
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