Greenman Retail SA will assemble a large portfolio of newly built German retail parks, sometimes known as neighbourhood centres. These parks, a combination of food and non food retail warehouses, will be let on long term leases to EDEKA, REWE, ALDI and LIDL; Germany’s top four retailers. Rents paid by these tenants will provide the vast bulk of shareholder returns.
The selection of properties and tenants for the portfolio is governed by an extremely detailed investor agreement restricting how shareholder funds are invested. Properties must be bought in specific cities, for a minimum NET purchase price of €3m, a maximum of NET purchase price €25m. It is expected that the final portfolio will consist of up to 12 properties.
Each anchor tenant must have a maximum chance of rental default of 0.75% and pass a strict bank led approval process. Greenman retail’s pre-approved primary anchor tenant’s; EDEKA, REWE, ALDI and LIDL have a maximum chance of rental default of 0.10%, 0.16%, 0.08% and 0.11% respectively.
These highly creditworthy tenants are expected to contribute over 60% of the portfolio’s annual rental income. The properties will be purchased using a secure purchase procedure. This structure ensures that Greenman Retail AG does not risk any of it’s funds during a property’s construction phase and guarantees 100% tenant occupancy.
Mortgages will be non-recourse to the assets of Greenman Retail SA’s or those of its shareholders. The maximum LTV must be 50%, however, the portfolio is expected to have a final LTV of c35%. Low LTV’s translate into low interest rates, which will be fixed for a period of five years or for the remainder of the investment.
With low finance and operational costs a large percentage of the portfolio’s rental income will be surplus Up to 85% of these surpluses will be returned to investors twice annually by means of a partial loan repayment. Target shareholder annual NET returns from rental income are expected to reach 6.18%.
The portfolio will be sold to an institutional investor between September 2017 and March 2018. Greenman Retail AG expects to sell the portfolio for the same price at which it was assembled. In that event a shareholder could expect an annualised return of 9.58%, 51% of which will be contributed by the biannual distributions the shareholders receive.
Greenman Retail AG has appointed a skilled and experienced supervisory board. The board is obliged to ensure Greenman Retail AG’s management adheres to the investor agreement. An independent auditor also reports directly to Greenman Retail AG’s supervisory board.
Investors have 24/7 access to information about Greenman Retail SA and Greenman Retail AG via a secure online “InfoCentre” provided by Greenman Retail SA’s manager; Greenman Investments.
Greenman Retail SA is open for investment either directly or via pension structures. The minimum investment is €100,000. Further information about Greenman Retail can be downloaded by clicking here. Alternatively register to receive a copy of Greenman Retail's investor memorandum by clicking here.