Prudential Real Estate Investors (PREI) and the Third Swedish National Pension Fund (AP3) have formed a joint venture to invest in retail properties throughout Germany.
The joint venture has acquired a first portfolio and agreed to acquire a second portfolio of grocery-anchored retail properties from funds managed by Taurus Investment Holdings, which remains a minority partner in both transactions.
The joint venture is acquiring controlling stakes of the properties in two separate transactions totalling EUR265 million, or a little more than USD361 million. The first transaction closed in April and the second is expected to close in the second quarter, with Taurus remaining a minority investor in both instances.
Combined, the entire portfolio comprises more than 200,000 square meters and 83 high yielding, grocery-anchored properties throughout Germany. Key tenants include REWE, Aldi, Lidl, Netto, NORMA and Tegut. The portfolio has centres located across Germany, including in Bavaria and Hesse, with properties near Munich, Frankfurt and Wiesbaden.
“The German market offers good prospects for retailers amid low unemployment, low household debt and rising wages,” says Sebastiano Ferrante, PREI’s head of Germany, where the company operates as Pramerica Real Estate Investors. “Grocery-anchored retail properties continue to fill a critical need in the market, despite the growth of online sales, leading some retailers to expand and providing our investors with attractive opportunities. We are delighted to partner with AP3 in this important Eurozone market.”
Klas Akerback, senior portfolio manager at AP3, says: “We see a potential for attractive risk-adjusted returns in established German regional grocery-anchored retail, as the tenants are strong companies and existing sites will benefit because stricter planning rules make new construction difficult. I am very pleased to be working on this investment with Pramerica’s experienced team.”
Lorenz Reibling, founder and partner at Taurus, says: “We are pleased to have found a strong and experienced partner that enables us to continue Taurus Euro Retail Funds I & II, and are looking forward working with Pramerica and AP3. We share their positive outlook on the German retail real estate sector.”