Greenman OPEN, one of Germany’s largest food retail-focused investment funds, and German retail property developer, Schoofs Immobilien, have agreed to develop €215 mln of supermarket-anchored mixed-use assets in Germany.
Greenman’s head of acquisitions, James McEvoy, told PropertyEU the deal had been signed earlier this week for the creation of 11 assets located near large cities with growing populations in Hesse, Rhineland-Palatinate, Baden-Württemberg, Bavaria and Saxony.
The properties will be anchored by EDEKA, REWE, ALDI Süd and Tegut supermarkets and are scheduled for completion by 2025. Once completed they will have a WAULT of 15 years.
The agreement can be seen as gutsy in that parties to the deal had to agree a value notwithstanding inflationary construction costs as well as an uncertain market for property values.
McEvoy stressed the comfort of security in 15-year leases. But equally noteworthy is how the development includes a residential component of some 200 apartments in areas of population growth, which can be viewed as reducing or offsetting risk given fashion retailers make up a small proportion of the overall rental income.
It comes as many planning departments in German cities are encouraging mixed-use retail and residential schemes rather than single-storey retail.
Greenman said the agreement signalled its commitment to mixing grocery retail with housing to help meet the demand for housing in suburban areas seeing rapid population growth.
In keeping with ESG goals, the properties are targeted to be of DGNB (German Sustainable Building Council) gold standard and if achieved they will make a significant move along Greenman OPEN’s path to net-zero by 2040.
Greenman and Schoofs have worked together before, and McEvoy said: 'This latest collaboration marks an evolution in our successful relationship with Schoofs. By working with specialist retail developers in this way, Greenman OPEN is able to secure assets that suit our anchor tenants and are future proofed to meet both their and our sustainability goals.’
He added grocery anchored retail remained a stable asset class, providing long-dated income from typically 15-year consumer price index linked upward only lease agreements.
Managing director of Schoofs Immobilien Frankfurt, Mohamed Younis commented: ‘We look forward to working with Greenman OPEN on the development of these 11 grocery-anchored mixed-use assets. It’s important for us at times like these to have a partner like Greenman by our side who understands grocery assets and is keen to continue expanding its fund portfolio.'
Greenman OPEN was represented by BKLAW Bottermann Khorrami Rechtsanwälte PartGbB and Schoofs Immobilien Frankfurt by Oppenhoff & Partner Rechtsanwälte Steuerberater mbB.