Germany
The Group invests in and manges a commercial retail property portfolio in Germany through its joint venture with AREA Property Partners.
As at 30 June 2011, the portfolio consisted of 48 properties throughout Germany with a total floor space of 5.0 million sq ft. The portfolio is managed by Garigal Asset Management GmbH, in which the Group holds a 30% stake.
The Group's investment in Germany, which began in 2005, is held through a series of Jersey companies, which either own the properties directly or through interests in German limited partnerships. Since October 2008, the Jersey companies have been held in a 50:50 joint venture between Capital & Regional and AREA. The Group owns a 49.60% effective share in the underlying portfolio due to various minority interests in the underlying German entities.
The investment criteria are as follows:
- Established out-of-town retail locations, typically anchored by food retailers with strong financial covenants;
- Large stand-alone hypermarkets and retail parks, with sales areas of more than 3,500 sq m with substantial land and car parking; and
- Strongly cash generative with additional asset management opportunities, generally through shorter leases
The Group's exposure to euro-denominated assets is reduced by borrowing in euros and hedging most of the remaining net investment through forward contracts. Income is not hedged.
Main tenants
Our German out-of-town retail investments differ markedly from our UK portfolio. We have concentrated on stand-alone retail units with the emphasis mainly on food stores and some DIY.