German portfolio
German portfolio:
Capital & Regional began to develop a portfolio of German property in 2005. The portfolio now stands at 50 properties throughout Germany and as at 30 December 2008 had a total floor space of 469,000 sq m, 98% fully let and occupied. The investment criteria are as follows:
- Established out-of-town retail locations.
- Large stand-alone hypermarkets and retail parks with sales area of more than 3,500 sq m with substantial land and car parking.
- 70% of passing rent anchored by food retailers with strong covenants.
- Strongly cash generative with additional asset management opportunities.
The properties are held through a series of Jersey companies, which either own the properties directly or through interests in German limited partnerships. As at 30 December 2007, the portfolio was 91.4% owned by Capital & Regional.
In October 2008 we sold 50% of our investment in Jersey to an investment fund managed by AREA. This disposal followed our strategy of building portfolios to a critical mass and creating a track record before divesting part of the investment to enhance our co-investing asset management business model. The transaction was structured such that the existing bank debt and interest rate swaps remained in place. As there were change of control provisions on the bank debt supporting one of the underlying portfolios,we initially sold 49.9% of our interest in this Jersey company and subsequently introduced joint control once bank approval had been obtained at the end of 2008.
As part of the transaction the joint venture then bought out the equity interest that the Hahn group owned in the portfolio and as a result, Capital & Regional's share is now 48.8% of the total property portfolio with various minority shareholders in the underlying German entities.
Top five tenants by rental income (2008)
| % floorspace | |
| Metro | 37.4 |
| Rewe | 10.1 |
| Edeka | 9.1 |
| Coop eG | 7.0 |
| Prakiter | 6.1 |
Germany key statistics
| At 30 December 2008 |
At 30 December 2007 | |
| Gross property asset value | €615m | €668m |
| Number of properties | 50 | 50 |
| Number of units | 193 | 193 |
| Initial property yield | 6.51% | 5.99% |
| Equivalent yield | n/a | n/a |
| C&R share | 48.8% | 91.4% |
| Bank debt | €484m | €485m |
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