Acting on behalf of AG Insurance, AG Real Estate has acquired a 36% stake in a portfolio of suburban big box retail space in Germany valued at EUR 350 million. The seller is a joint venture between Capital & Regional plc and a real estate fund managed by Ares Management, LP. The investment has been structured as a joint venture between PGGM, the Dutch pension fund giant, and Rockspring German Retail Box Fund ("RGRBF"), a fund managed by Rockspring Property Investment Managers LLP ("Rockspring"). Prime Management Düsseldorf will be responsible for managing the properties. Rockspring has structured the transaction and will manage the partnership. The deal will be financed with equity capital provided by the partners and a bank loan with an initial loan-to-value ratio of 40%.

The acquisition of the portfolio represents the largest transaction of its kind in Germany in the last five years. It consists of 23 suburban food-anchored big box retail parks located primarily in the former West Germany (92%). Total lettable area is 275,000 m2, with annual rental income of roughly EUR 28 million. Metro Group, owner of the Real hypermarket chain, is one of the main tenants across the portfolio, followed by REWE, Kaufland, Edeka and Globus. The portfolio is 98%-occupied with a weighted average unexpired lease term of 6.9 years. A major investor in Ascencio (Belgium), Frey (France) and Venti M (Italy), AG Real Estate has a proven track record with comparable suburban properties.

This transaction represents a step forward in AG Real Estate’s diversification strategy, a testament to our ability to gain a foothold in mature markets such as Germany by investing in an alternative asset class with an attractive initial return and excellent long-term potential. This new joint venture with first-class European investors highlights our ambition to enter new market segments without compromising on our strict asset management criteria.

Commenting on the acquisition, Serge Fautré, CEO of AG Real Estate, said: “We are pleased to be part of this partnership of first class investors, with shared goals and aligned interests. This is a portfolio of well-located properties with significant latent value that will provide the opportunity to deliver strong risk-adjusted returns. This first retail real estate investment in Germany comes in addition of our current activities in car park management (Interparking via Contipark) in Germany and is in line with our ambition to engage ourselves into new markets in a highly selective way.”