Redefine purchases German portfolio through joint venture with Redefine International

Marc Wainer, Executive Chairman of Redefine Properties.

Hot on the heels of the Leaf portfolio acquisition, Redefine today announced it has acquired a portfolio of 56 retail properties in Germany, in an equal joint venture with Redefine International.

This portfolio is valued approximately €157m million and reflects an initial net yield of 7.5%. The portfolio will initially be acquired with the existing bank debt of €100m which the joint venture intends to refinance immediately after the transaction closes. After the financing the portfolio will produce a yield on equity in excess of 11%.

Marc Wainer, Redefine Executive Chairman, comments: “This transaction is consistent with Redefine’s stated intention of acquiring offshore properties directly and in partnership with established players. It is our first direct investment in Europe, and by partnering with Redefine International, we also benefit from its experienced European asset management team.

“We sourced the portfolio and invited Redefine International to participate. All of the management and asset management will be undertaken by Redefine International for a fee of 0,375% of Redefine’s share of the portfolio’s gross asset value.”

The properties span some 128,000sqm of lettable area and comprise a mix of stand-alone supermarkets, food-store-anchored retail parks and cash-and-carry stores. The properties are well located within their respective markets, 85% in Western Germany and Berlin, with the remainder in East Germany.

The portfolio is 99.2% occupied and benefits from strong tenant covenants with 90% of its gross rental income accounted for by Edeka, Netto, Rossmann and Real who are amongst Germany’s largest retailers, exposing Redefine to high quality, secure, indexed-linked cash flows.

The net equity consideration of approximately €58m will be funded equally by Redefine and Redefine International from existing cash resources. The joint venture will initially assume the existing bank debt facilities of €100m which have a weighted interest cost of 4.4% per annum, but the joint venture will refinance the existing facilities at current market rates on closing. The refinancing will be approximately 50% loan to value with an all-in cost of debt of 1.8%.

“We are extremely excited about this acquisition. Our investment in Northpoint Australia is performing exceptionally well and we have no doubt that this acquisition will be equally successful,” concluded Wainer.

Redefine is one of SA’s largest REITs with and property income earning asset base valued over R50 billion. In addition to its first direct European acquisition, Redefine has a 30.1% direct interest in Redefine International PLC and a R3.9 billion presence in the Australian property market, with 50% interest in North Sydney’s landmark tower, Northpoint, and a 15.9% holding in ASX-listed Cromwell Property Group, as well as a 10% indirect equity interest through Redefine International.