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AP3, Pramerica form German retail property joint venture

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Sweden’s third pensions buffer fund AP3 has formed a joint venture with Pramerica Real Estate Investors to invest in retail properties in Germany.

The institutional investors said the joint venture had already bought its first portfolio and agreed to buy a second.

The two separate deals – worth €265m in all – will give the joint venture controlling stakes in grocery-based retail properties from funds managed by Taurus Investment Holdings.

Sebastiano Ferrante, head of Germany for Pramerica Real Estate Investors, said: “The German market offers good prospects for retailers amid low unemployment, low household debt and rising wages.”

Klas Akerback, senior portfolio manager at AP3, said the pension fund saw the potential for attractive risk-adjusted returns in established German regional grocery-based retail.

This is because tenants are strong companies, it said, as well as the fact existing sites will benefit because stricter planning rules make new construction difficult.

Taurus will remain a minority partner after both deals.

The first deal closed in late April, and the second is expected to close in the second quarter of this year, they said.

The whole portfolio from both transactions includes more than 200,000m2 of space in 83 grocery-based properties across Germany.

Tenants include retailers such as Aldi, Lidl, Netto, NORMA, REWE and Tegut, with shops located near Munich, Frankfurt and Wiesbaden.

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