ECE Real Estate Partners
TRUST IN RETAIL HAS RETURNED
Despite largely stable results, the retail sector has been buffeted by strong headwinds for almost ten years. The structural change in the retail sector, the growth in e-commerce, interest rate rises, and, last but not least, the coronavirus pandemic have all led to uncertainty. “But throughout these storms, our portfolio has remained very well in operational terms,” explains Kraft. “Footfall at our European centers is back to 2019 levels, the leasing rate in our portfolio is at a record level of around 98 percent and we are seeing sustainable growth in sales and rents.”
This has not gone unnoticed by institutional investors. For example, ECE REP was recently able to raise 100 million euros in additional capital for its EPIG fund, which invests in high-quality shopping centers in Europe and comprises a portfolio of seven properties with a total market value volume of more than 2.2 billion euros.
INTERNATIONAL INVESTOR BASE CONSOLIDATED
With new investors from the Nordic countries, Switzerland, and the Netherlands, ECE REP has been able to consolidate its international investor base. The secret of its success? “Even in the years when capital was abundantly available, we concentrated solely on buying very high-quality properties,” explains Kraft. Another key success factor is access to ECE’s expertise across all departments – such as the in-house leasing teams, the in-house center management teams, and the group’s technical services.
GROWTH PROSPECTS IN SPAIN AND POLAND
In terms of further acquisitions, Markus Schmitt-Habersack, also Managing Partner of ECE REP, sees positive growth prospects, especially in Spain and Poland. The entry prices in both markets are currently very attractive. Schmitt-Habersack emphasizes the diversification of assets across seven European countries as a particular strength of ECE REP’s center portfolio. This has made it easier to compensate for economic fluctuations between individual markets.
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Dr. Volker Kraft (left) and Markus Schmitt-Habersack, Managing Partners of ECE Real Estate Partners.
The investment management division ECE Real Estate Partners (ECE REP) is continuing on its successful course. “We want to continue growing by taking advantage of institutional investors’ renewed interest in shopping centers,” says Dr. Volker Kraft, Managing Partner of ECE REP. To this end, the division intends to raise further capital for its open-ended core fund and eventually launch new funds.
>€ 10 billion
ASSETS UNDER MANAGEMENT
25
PROPERTIES IN THE SHOPPING CENTER PORTFOLIO
>15
YEARS TRACK-RECORD OF 15 ECE REAL ESTATE PARTNERS
ACTIVE IN 7
EUROPEAN COUNTRIES
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Galeria Kaskada in Szczecin
RETAIL POWERHOUSE IN STETTIN
ECE REP concentrates its activities on centers with a leading market position. As Schmitt-Habersack puts it: “In keeping with the principle ‘Follow the retailers,’ we also consistently focus on strong tenants who play a key role in the center’s success.” One example is the Galeria Kaskada in Szczecin, where Zara recently expanded its space to 3,000 m². All other Inditex brands at the shopping center also increased their retail space. “The positive sales growth vindicates our approach,” says Schmitt-Habersack. As a “retail powerhouse,” Galeria Kaskada has evolved into a center with real pull across the entire Polish region of West Pomerania and beyond. A clear strategic focus always contributes to the success of individual assets, whether at the Megalò in Italy, the Rosengårdcentret in Denmark, or the Parque Principado in Spain.
“The considerable flexibility and adaptability of shopping centers makes them more resilient and creates growth potential.”
DR. VOLKER KRAFT, MANAGING PARTNER OF ECE REAL ESTATE PARTNERS
“Large centers in growing metropolitan regions that are leading in their catchment area are performing particularly well and stand out in our portfolio.”
MARKUS SCHMITT-HABERSACK, MANAGING PARTNER OF ECE REAL ESTATE PARTNERS
UNLOCKING GROWTH POTENTIAL
Kraft cites the considerable flexibility and adaptability of shopping centers as a key distinguishing feature when compared to other kinds of retail real estate. This makes it possible to take advantage of the opportunities presented by the constant structural change in the retail sector. “New attractive concepts can constantly be introduced, spaces can constantly be optimized, and new uses can constantly be added. That is what makes shopping centers more resilient and creates growth potential,” says Kraft.
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HOTEL ROOMS ARE BEING BUILT ON THE ROOF OF BERLIN’S GESUNDBRUNNEN CENTER
HOTEL ON THE CENTER ROOF
The most recent example of how a center can be developed with a view to increasing its value is the Gesundbrunnen Center in Berlin, which is having a hotel added to the roof. An extension to the building will be completed by 2027, with a total of 162 designer apartments operated by the serviced apartments brand Stayery. The hotel will create additional rental space and be an attractive addition to the existing tenant mix of retail, restaurants, and service providers. The building will be based on a modular timber design and will enable sustainable in-fill development on the existing site without the need to build over further land.
Kraft: "This project highlights how the close cooperation between the members of our multidisciplinary team of real estate, retail, and hotel experts makes it possible to further optimize an already very successful center for our institutional investors,” says Kraft. He stresses that an unused parking deck in the Gesundbrunnen Center being converted into a hotel area does not mean there is now less focus on parking. On the contrary: “We are now also introducing parking fees for the first time in the remaining parking areas at the Gesundbrunnen Center, generating further income.” //
ABOUT ECE REAL ESTATE PARTNERS
ECE Real Estate Partners (ECE REP) is licensed as an alternative investment fund manager (AIFM) and has been successfully investing funds from leading international institutional investors – such as insurers, sovereign wealth funds, and pension funds – in shopping centers with a strong market position and value-growth potential since it was established in 2010. With a portfolio of over ten billion euros under management, ECE REP is Europe’s leading institutional investment management company specializing in shopping centers.