Credit: Savills
Ticker

Savills IM acquires 38 supermarkets in Denmark for new European Food Retail Fund

Savills Investment Management (Savills IM), the international real estate investment manager, has launched a European food retail–focused fund, the Savills IM European Food Retail Fund.

The German special fund has received capital commitments of EUR 109 million from six German institutional investors at first closing. The first investment is a Danish supermarket portfolio of 38 urban properties with a total volume of c. EUR 140 million. The assets are let to the food discounter REMA 1000 Denmark on a 15-year fixed-term. The subsidiary of the Norwegian food trading group Reitan Handel has a market share in the Danish food retail market of 15.5%. The acquisition is part of a sale-and-lease-back transaction based on a yield of 5%.

As a core/core-plus fund, the European Food Retail Fund mainly aims to achieve a sustainable annual distribution yield of at least 5%. The forecast yield for the Danish seed portfolio exceeds this target. The fund target size is at least EUR 750 million with a maximum debt ratio of 50%. 

While the main fund strategy is to acquire further supermarket portfolios with lot sizes usually starting at c. EUR 50 million, the fund may also acquire neighbourhood centres, mixed-use urban properties and specialist retail centres provided that they have a food retailer as an anchor tenant and at least 70% of the rental income comes from food/grocery and basic services tenants. At least 85% of the rental income at the portfolio level will come from supermarket/food tenants.

After this first transaction in Denmark, the geographical investment focus is on Benelux and France, but complemented by Southern Europe (Italy, Spain, Portugal), the UK and Ireland as well as Germany and Austria. The German allocation is a rather low maximum of 15% because the fund is primarily aimed at German institutional investors, who are often already invested in German-focused comparable products and are seeking diversification into other European countries.

The defensive food and discount retail segments show resilience to disruption, as highlighted in Savills IM’s Outlook 2021 report. Findings from the Outlook 2021 investor survey show that food retail is the only retail segment where investors want to increase rather than decrease their exposure. Long-term and inflation-linked leases, tenants with strong credit ratings, extensive immunity to recessions and a relatively low susceptibility to e-commerce trends make supermarkets and other food shops an attractive investment for investors focused on long-term secured and stable distributions.

The advisors to Savills Investment Management on the transaction were Bruun & Hjejle, KHR Architects, Savills and Capital Investment, who provided this opportunity.

Ian Jones, Director of Investment at Savills Investment Management: “We are delighted to have been able to work with REMA to close this major deal. We look forward to a long partnership with REMA to help maintain and develop their position as a leading supermarket operator in Denmark. This is the first transaction for our new flagship grocery fund, which will be investing in food retail across Europe. There is significant appetite for this sector among our investor base and we look forward to further significant transactions in 2021.”

Henrik Burkal, CEO REMA 1000 Denmark: “It has been an absolute pleasure to complete this transaction with the international investor Savills Investment Management and their advisor Capital Investment, which we see as a recognition of REMA 1000 as partner and shows that food retail is a very solid and resilient investment object.”

Sign up for our ACROSS Newsletter. Subscribe to ACROSS Magazine.

Ticker MORE

Waitrose appoints new Retail Director

The John Lewis Partnership announced that Tina Mitchell will join Waitrose as Retail Director.

Anette Simpson Appointed as Chair of ULI United Kingdom

The Urban Land Institute (ULI) has announced the appointment of Anette Simpson, director of development and partnerships, Legal & General Affordable Homes, as chair of ULI United Kingdom (ULI UK). She succeeds Vanessa Hale, director of research, BNP Paribas Real Estate, and will officially begin her voluntary two-year term on 1 July 2021.

Sonae Sierra avoided costs of €15 million in 2020 by implementing eco-efficiency measures

The Company has reduced its CO2 emissions by 84% since 2005 and electricity consumption by 66% since 2002.

Yardi Acquires We Are Forge Ltd to Further Expand Visitor Management Integrated with Access Control Capabilities

Yardi® announced the acquisition of We Are Forge Ltd (Forge), a Bristol, UK based software company, that specialises in visitor management and smart access control for a wide range of real estate asset classes including, office, retail, industrial, flexible workspace and the education sector.

Serravalle Designer Outlet goes beyond fashion with new state-of-the-art leisure concept

McArthurGlen is pleased to announce the official opening of "Play Land", a brand new 6,000 square metre leisure concept at Designer Outlet Serravalle that is dedicated to family entertainment. The 7 million euro attraction introduces a new state-of-the-art experiential element to the centre that further enhances the shopping experience for guests of all ages.

EXPO REAL: the network to meet again in Munich

Preparations for Expo Real 2021—to be held from October 11 to 13 at the trade fair center in Munich—run at full speed, opening a long-awaited perspective for the international real estate industry.