Retail real estate specialist ECE Real Estate Partners has set up an open-ended pan-European shopping centre fund.
The new "ECE Progressive Income Growth Fund" (EPIG Fund) has secured equity commitments of more than €700 million from a leading global institutional investor base and has acquired a seed portfolio consisting of dominant shopping centres in Germany, Austria, Denmark, Poland and Italy with a market value in excess of €1.6 billion.
For the upcoming years, further acquisitions of dominant European shopping centres are planned.
The EPIG fund is aimed at long-term investors striving for stable regular distribution yields of around 6-7% per annum. in the current low interest-rate environment. Strong alignment of interest has been secured by the Otto family acting as an anchor investor.
The EPIG Fund will exclusively invest in market-leading shopping centres benefiting from prime locations in select European cities with attractive economic fundamentals and growth forecasts.
Investment opportunities arising from structural changes in the retail sector
In a retail environment characterised by continuous dynamism and rapid change, ECE Real Estate Partners intends to take advantage of attractive investment opportunities arising from the ongoing structural changes.
With net initial yields ranging from 4.0% (Germany) to 6.0% (Italy), the European market for shopping centres is currently valued at historical lows when compared to government bonds and other forms of real estate such as logistics, office and residential.
In addition, market-leading shopping centres in easily accessible central locations with a high quality of stay, an attractive gastronomy and strong service offering are increasingly gaining market share in a polarising retail market.
High-quality seed portfolio of six super-regional shopping centres in growth regions
Including Stern-Center Potsdam, LOOM Bielefeld, Megalò Chieti, G3 Gerasdorf/Vienna, Galeria Kaskada Szczecin and Rosengårdcentret Odense, the seed portfolio comprises six superregional shopping centres with a total leasable area of 350,000 sq m and 750 shop units, attracting more than 45 million visitors annually.
The assets were owned by the ECE European Prime Shopping Centre Fund, a closed ended value-add fund that in the course of the past years invested extensively in the modernization, expansion and value creation of the centres.
"With our high-quality seed portfolio consisting of dominant shopping centres situated in prime locations within European growth cities, we are in an excellent position to generate attractive sustainable dividend yields for our investors long-term. In addition, we see future attractive opportunities arising from our continued development and positioning of our centres into omni-channel trading platforms,” said Dr Volker Kraft, Managing Director of ECE Real Estate Partners.
RPA Perspective Separately, Peter Korbačka and Sonae Sierra have finalised the process of creating its real estate investment vehicle TRIVIUM Socimi (Spanish acronym for a REIT) and having it listed on the Alternative Stock Market (MAB by its initials in Spanish).
The Socimi entered the market following a capital increase of €255 million, the majority of which was subscribed by Peter Korbačka and Sonae Sierra, which will also be in charge of the property management of the assets. The opening price of Trivium shares on the stock market will be €51.
TRIVIUM Socimi was conceived as an investment vehicle with a focus on leasing, through its subsidiary Iberian Assets, the stores located at GranCasa (Zaragoza), Max Center (Bizkaia) and Valle Real (Cantabria) Shopping Centres, which were acquired in December 2018. These assets, which have a total gross lettable area of 116,437 sq m, are all in consolidated locations near major population centres.
TRIVIUM’s strategy will consist of maximising the income generated by the assets it owns, focusing its efforts in providing a quality experience to its clients and in improving the offer of the shopping centres. In this respect, the Socimi (REIT) has already started working on an ambitious plan to renovate and reposition the assets, with an estimated investment of €38.8 million for the period 2019-2022.
In respect to this launch, Peter Korbačka stated that “Starting this investment vehicle together with Sonae Sierra is a guarantee of success. Spain is one of the most solid real estate markets in Europe, and TRIVIUM is a great opportunity to continue as market leaders.”
