17th Aug 2015 06:50
LONDON (Alliance News) - Kennedy Wilson Europe Real Estate PLC Monday said it has bought a portfolio of 11 Carrefour supermarkets and five Dia supermarkets in Spain for EUR85.5 million, funded from the company's cash resources.
The real estate property company said the acquisition is part of a joint venture with French institutional investors managed by AEW Europe.
The 16 supermarkets comprise 593,600 square feet of lettable space across seven high street stores and nine big box stores in the Madrid and Barcelona regions. The stores generate a net operating income of EUR6.0 million and have a weighted average unexpired lease term of 5.4 years, Kennedy Wilson said.
Carrefour has a market capitalisation of EUR18.6 billion and is Spain's second largest supermarket, while Dia, which separated from the Carrefour Group in 2011, is the fourth largest supermarket in Spain.
"This exciting acquisition represents KWE's largest purchase to date in Spain and brings our Spanish ownership to EUR136.8 million or 3.9% of the total portfolio," Chief Executive Mary Ricks said in a statement.
"The portfolio benefits from a strong geographic concentration around the affluent areas of Madrid and Barcelona regions, where around 70% of the income is generated along with the robust tenant covenants of Carrefour and Dia providing secure income streams. The attractive value of this portfolio is further cemented by the blended approximately 570 basis points premium to the respective corporate bond yields of Carrefour and Dia of 1.2% and 1.1%, when compared to our going-in yield of 6.9%," she added.
"The prime high street units are 29% under-rented at today's ERV's. This coupled with our ability to grow rents through the CPI index-linked leases as the economy recovers and Spanish consumer spending improves and the re-setting to market rents through upward only rent reviews every six years will deliver another lever to create value," Ricks said.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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