DECEMBER 3, 2013

Meyer Bergman acquires German retail

by Reg Clodfelter

Meyer Bergman has acquiredthe Karstadt department store on the Hermannplatz in the center of Berlin using capital from Meyer Bergman European Retail Partners II. The approximately 650,000-square-foot retail property was acquired for €60 million with 65 percent of all-in cost financing from HSH Nordbank. Markus Meijer, CEO of Meyer Bergman, has confirmed the acquisition.

The fund has been very active, acquiring a multi-use property on Paris’s Champs-Elysées for €245 million in November, as well as Calle Serrano 60 in Madrid from Caixa Bank for roughly €50 millionthis past summer and a 550,000-square-foot retail property in Bradford, England, for €250 million in 2012. The recent acquisition is “a deal that we feel has very little downside risk,” Meijer says, “because it’s fully leased for another 15-plus years, but we have the opportunity to extract additional value from repositioning the space into high street retail from a department store.”

MBERP II was launched in June 2012 with a €500 million fundraising goal. The value-add fund had a €267 million close in October, and should have a final close by March 2014. The fund will use less than 50 percent leverage by the end of the investment period, and expects returns around 20 percent. Meyer Bergman is co-investing €10 million in the fund.

Investors include a number of North American pension funds, as well as a U.S. fund of funds managed by Siguler and Guff. U.S. investors have been making their way back into European markets of late because, as Meijer comments, many investors “feel that, in the U.S., a lot of growth is already priced in and it’s harder for people to get their returns, particularly for value-add and opportunistic funds. If you look at the one place in the world where you can still find a lot of distress and a lot of pricing arbitrage, it’s probably in Europe.”

With both MBERP II and its predecessor, Meyer Bergman has been very successful in attracting investors who were initially leaning toward a more diversified strategy, but ultimately found the targeted retail approach more attractive due to the defensive nature of prime retail. Additionally, Meijer notes, prime retail can often offer value creation without an overreliance on market improvements.

Meyer Bergman is an investment manager that specializes in retail properties and invests across Europe with typical transaction values ranging from €40 million to €350 million.


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