Six German Retail Properties - the Louis Group International ...

Recommendations

Info

the german retail property market With a 2005 retail spend of €333 billion (of Europe's €2,300 billion), Germany is the 3rd largest retail market in Europe behind France and the UK. Yet, on a per capita basis it ranks only 14th, whereas France and the UK are tied at 6th. Retail sales growth over the period 1995 - 2005 was a mere 2%, significantly behind France and the UK at 35% and 52% respectively. Although forecast retail sales growth for the next decade (2006-2017) is better at 6%, it is still far behind the expectations for France at 27% and the UK at 31%. German consumers, although among the most well-off in Europe, are extremely price sensitive. Price is consistently placed above considerations such as quality, choice and service, and the concept of "value-added" is almost nonexistent. This gives little incentive to retailers to improve their offerings or be innovative in their retail practices. Lacking the vibrancy of a consumer driven market (such as France or the UK), many of Germany's larger retailers are forced to look to broader European markets for growth. Consequently, of all European retailers, German businesses are among the most international (accounting for 25% of European cross-border sales) with significant market share in most countries. Somewhat paradoxically, however, Germany attracted 3.6% (7th most) of all shopping centre investment in Europe in 2004, and 9.4% (2nd most behind the UK) in 2005, with the result that (in 2006) Germany had 12,4 million m 2 of shopping centre floorspace - the 3rd most in Europe. There is undoubtedly enormous international interest in German retail property, which may be for 3 main reasons: • Under-Supply - Although shopping centre space has doubled in the last 10 years, Germany still offers only 140m2 of shopping centre space per 1,000 inhabitants. In contrast to more than 200m 2 in Spain and France, and around 300m 2 in the Netherlands and Sweden, Germany appears to have some catching up to do. properties germany • Yield Gap - Financial investors are attracted by the favourable interest rate environment. The comparatively high property yields contrast with relatively low financing rates, create an attractive opportunity for highly leveraged investors. The interest rate spread between rental yields and long-term financing rates is favourably high in comparison to other European countries. • Economic Revival - Statisticians talk of the mean reversion concept. What this implies is simply that a market will not be able to deviate permanently from its trend growth rate. Retail trade has been depressed in Germany for some time and there is an expectation that "what goes down must come up." Private Placement Memorandum Six German Retail Properties 4
convenant details Dm-Drogerie Mark The first dm-drogerie markt (chemist store) was founded in 1973 in Karlsruhe. Just 5 years later there were already over 100 stores in Germany and Austria. The past 2 years have seen sales growth of 8.6% and 11.7% respectively, with 2005 turnover reaching €3,7 billion. With stores in Germany (900), Austria (where they have a 40% market share and operate over 350 stores), the Czech Republic, Hungary, Croatia, Slovakia, Slovenia, Serbia and Bosnia, today the dm-group trades from nearly 2,000 stores across Europe employing 25,000 people. Edeka The Edeka Group is the largest German supermarket corporation, currently holding a market share of 26%. Founded in 1898, it now consists of several co-operatives of independent supermarkets all operating under the umbrella organisation Edeka Zentrale AG & Co KG, headquartered in Hamburg. Ranging from small corner stores to hypermarts, there are approximately 11,000 stores with the Edeka name, employing about 250,000 people. Showing 22% sales growth over the period 2001-2005, Edeka generated turnover of €38 billion for the 2005 financial year. Fristo properties germany Founded in 1970 in Nuremberg, Fristo is a private company operating retail beverage stores across 9 German states as well as in Austria with over 300 stores and an annual turnover of €150 million. Fristo continues to invest heavily in distribution and logistics technology to both reduce the costs of transport and storage, and ensure consistently high levels of product availability. This focus on customer convenience and competitive pricing keeps Fristo at the forefront of its market. Heinrich Deichmann-Schuhe The Heinrich Deichmann-Schuhe GmbH & Co. KG is a German company established in 1913 that manufactures shoes and sports wear. With over 1,000 outlets in Germany alone, Deichmann operates a further 1,100 retail stores in Austria, Poland, Hungary, Great Britain, the Netherlands, Switzerland, the USA, the Czech Republic, Turkey, Denmark, Slovakia, Slovenia, Croatia, Sweden and Romania. Although the Institut fur Handelsforschung (Trade Research Institute) reports that shoe retailing was down by 0.2% in Germany for 2006, Deichmann increased turnover by over 7%, selling 65 million pairs of shoes for €1.26 billion. Across all markets, turnover was up 10.5% to €2.71 billion in 2006. KiK Textil-Diskont KiK forms part of the Tengelmann Group - a 140 year old business founded by the Schmitz-Scholl family in M?lheim an der Ruhr in 1867. As of 2005, the Group employed 185,000 people at over 7,500 branches in 15 countries, and generated sales totaling€€26.3 billion. From its beginnings in the early 1990's, KiK has already expanded its branch network to just short of 2,000 branches, employing 13,000 people. In 2005, footfall increased 27% and sales were up 22% over the 2004 figures to €995 million. With a strong focus on developing a positive brand image, preparations for expansion to 3,000 stores are in progress. Private Placement Memorandum Six German Retail Properties 5
Page 1 and 2: The purchase of Six German Retail P
Page 3 and 4: preamble properties germany Louis G
Page 5: the german property market Activity
Page 9 and 10: erlin Landlord: Louis Group Propert
Page 11 and 12: ellwangen Landlord: Louis Group Pro
Page 13 and 14: adolfzell Landlord: Louis Group Pro
Page 15 and 16: ental schedule Area Lease Lease Lea
Page 17 and 18: ank finance Leverage This property
Page 19 and 20: investment projections Investment S
Page 21 and 22: investment risks Potential sharehol
Page 23 and 24: administrative issues Investment Co

Six German Retail Properties - the Louis Group International ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?