Stenprop sells Berlin shopping centre for EUR30.8m
Stenprop, a UK multi-let industrial (MLI) property company, has exchanged contracts on the sale of its freehold interest in the Hermann Quartier shopping centre in Berlin, Germany to Munich based firm ILG Capital, acting on behalf of the regulated special property fund ILG Einkaufen D managed by IntReal International Real Estate Kapitalverwaltungsgesellschaft, for EUR30.8 million.
The disposal price is in line with the 30 September book value and reflects a 19 per cent premium to the 31 March 2020 valuation.
The disposal will conclude the sale of the Company’s food-led Berlin retail portfolio following the sale of Neucӧlln Carrée retail park earlier this year and the recent exchange of contracts on the sale of the Victoria Centre. It further progresses Stenprop’s strategy to become a 100% UK MLI business by March 2022, with the Company’s MLI assets expected to rise from 64% to 72% of Stenprop’s total portfolio once the sale completes (assuming earlier completion of the sale of the Victoria Centre and based on asset valuations as at 30 September 2020 and subsequent purchase prices of MLI acquisitions).
Net proceeds from the sale after deduction of anticipated transaction costs, repayment of debt and property taxes are expected to be EUR19 million, which Stenprop intends to use to fund further acquisitions in the MLI sector.
Totalling 8,274 sq m of gross lettable space, Hermann Quartier is a covered retail centre prominently located above the Hermanstrasse S- and U-Bahn station. The weighted average rental is currently circa EUR15.20 per sq m.
James Wakelin, Head of Debt and Special Projects, says: “Exiting the Berlin retail portfolio represents another significant milestone towards Stenprop’s transition to become a fully focused UK multi-let industrial REIT and is the culmination of a successful year in our disposal programme. Our MLI portfolio has performed well throughout the pandemic, providing further evidence of the resilience of the asset class. We look forward to putting the proceeds of this sale to work into our strong pipeline of opportunities as we remain on target to be 100% MLI by the end of the next financial year.”
Completion of the disposal is expected to occur upon satisfaction of the last conditions precedent described below and by no later than six months from the date of exchange, following which the disposal price will be paid to the seller. Failure to complete due to a default by the purchaser will result in the seller retaining the deposit amount of EUR3.08 million which was paid by the purchaser into an escrow account on 28 December 2020. Either party may terminate the disposal agreement should the property suffer significant structural damage resulting in damages or rent losses exceeding 10 per cent of the purchase price or rent losses of more than 20 per cent over a period of six months.
The disposal agreement contains market standard representations and warranties for a deal of this size and nature. A limited 13-month guarantee capped at EUR1.3 million was provided by a company of the Stenprop group to the purchaser in respect of claims against and for certain tax liabilities of the seller under the disposal agreement.