Savills Investment Management has paid €140 million for a portfolio of 38 Danish urban supermarkets in a sale-and-leaseback deal.
The acquisition, which was done on a 5% yield, is the first on behalf of a new European fund focussed on food retail, The Savills IM European Food Retail Fund.
The fund has been established as a German special fund. At first close it received capital commitments of €109 million from six German institutional investors.
The supermarket assets just acquired are leased to food discounter REMA 1000 Denmark on a 15-year fixed term. The tenant is a subsidiary of Norwegian food trading group Reitan Handel and has a 15.5% market share of the Danish food retail market.
The new fund has a core/core-plus strategy and aims to achieve a sustainable annual distribution yield of at least 5%. The forecast yield for the Danish portfolio exceeds this target. The fund target size is at least €750 million with a maximum debt ratio of 50%.
More acquisitions in prospect but must be food anchored
The fund said it plans to acquire further supermarket portfolios with lot sizes of around €50 million. It may also acquire neighbourhood centres, mixed-use urban properties and specialist retail centres with a food retailer as anchor and at least 70% of the rent obtained from food/grocery and basic services. At the portfolio level, at least 85% of the rental income will come from supermarket/food tenants, Savills IM said.
Following the Danish deal, the geographical focus will be on Benelux and France, complemented by Italy, Spain, Portugal, the UK, Ireland, Germany and Austria. The German allocation will be a maximum of 15% because the fund is primarily aimed at German institutional investors.
Food and discount retail segments are defensive because they are resilient to disruption, Savills IM’s said.