Mitiska REIM – we add value
Stefan Klug, Head of Germany, speaks to Germany’s leading real estate journal Immobilien Zeitung about the company’s value-add approach to investing in European retail parks.
Stefan Klug, Investment Director Germany at the Belgian investor Mitiska Reim (Mitiska), sees the price development for retail properties quite critically: “It is unfortunate that development properties are offered at core prices in some places.” Nevertheless, the revenue potential resulting from the right repositioning is still negligible lift, in the retail market huge. “Value-Add is the key issue at retail parks,” says Klug, adding, “However, that’s not a protected term, everyone understands something different under a Value-Add object.”
For Klug, a value add investment means adapting each property to the strengths and weaknesses of each location. A standard concept could not exist given the large differences in the general conditions. He points to two ongoing projects: “In Freiberg, we have a land value of 10 euros / m², in Mönchengladbach 210 euros / m². We have to take that into account. “
The third and most recent acquisition of Mitiska in Germany was the retail park at Frankfurter Strasse 232 in Braunschweig at the end of March. This means that around 20% of the currently invested equity capital of just under €130 million from the Mitiska First Retail International 2 (FRI 2) fund has been invested in German real estate. However, Mitiska does not have a fixed quota for German properties. The still to invest 100 million euros of equity Of the almost 100 million euros to be invested from the same fund still allow investments of about 250 million euros and should be invested according to Klug, about half in Western Europe, the other in Eastern Europe. “The exact object selection is decided in coordination of the individual country managers,” explains the Mitiska Germany boss. In total, the company is currently invested in 46 European retail properties through two funds, spread across nine countries.
According to Klug, the existing differences in the European submarkets are having an effect on the realignment of the individual retail real estate properties. For example, low-price concepts in the apparel and footwear segment, which will only grow slowly in Western Europe, if at all, will continue to grow strongly in Eastern Europe. “This of course is reflected in the targeted tenant stock,” explains Klug.
In rural areas, the retail park as a local supplier is virtually non-replaceable. Nevertheless, according to Klug for the realignment is sometimes worth a look into the inner cities. “We want to learn from the positive experiences of the shopping centers, but then implement them in a specialist way,” says Klug. Among the ideas that can be well integrated into retail parks, Klug counts on recreational activities such as: Gyms, the greening of roofs and parking lots, seating arrangements, visitor guidance systems by means of color codes as well as a gastronomic offer adapted to the public’s needs.
He does not think much of caring for customers with special events or special architectural luxury. “There is a limit to the amount of events that can be conveniently organized in shopping malls. As well as the amount of marble that can be obstructed. “Klug knows what he’s talking about. The architect studied the shopping center business from his many years as Managing Director, today Unibail-Rodamco. Instead of dull copying from the mall, a specialist investor must be aware of the specific strengths of his asset class, for example, when it comes to picking up pre-ordered goods on the Internet.
“A real Click & Collect can hardly be realized in inner-city locations, because only the access roads clog up. A conveniently located retail park can score points in this regard, especially if it provides free customer parking. For the self-collector, it is a huge relief, if he does not have to drive over the diaphragm into the city center, “explains Klug. As a potential tenant, Mitiska therefore specifically addresses those traders who are interested in integrating their stationary business with online trading.
For additional ideas for the realignment Klug advises to look beyond the horizon. He is impressed by the French market hall concepts such as Grand Frais or O’Tera du Sart, which claim to redefine the idea of the supermarket. Separate stands of local traders for baked goods, meat and fish are grouped around a vegetable area. One and a half years ago, Metro had begun to realign its real hypermarkets in Germany with a similar concept. However real realizes all food in the market hall itself, third-party suppliers are represented only in the Vorkassenbereich. In addition, only a few real locations have been converted, while Grand Frais has existed for over 20 years and has 95 stores across France.
In any case, the Market Hall idea sees one of several possibilities for further developing specialist retail centers and playing out their specific strengths. “Such concepts are also due to their space requirements in a city center location very difficult to handle,” says the Mitiska Germany boss.