The business concerns eleven warehouse and industrial parks in the Czech Republic and Slovakia. In addition to the Slovak international warehouse C&A, properties are sold, for example, in Lovosice, Písek, Uherské Hradiště or Vyškov. In total, it is over 125 thousand square meters of rental space. The store also includes another 140,000 square meters of land intended for further construction.
"Through the transaction, we have strengthened the fund's position in Central Europe, particularly in the emerging markets of the Czech and Slovak Republics, which are expected to benefit from further integration with neighboring Western European economies," said Simon Garing, CEO of Cromwell European Real Estate, the buyer manages the fund.
"Our strategy is to build long-term successful funds focused on investments in industrial real estate in Central Europe. However, we do not comment on any investments or divestments until the conclusion of the relevant transaction," responded co-founder of Arete Lubor Svoboda.
Just before the outbreak of the coronavirus pandemic, the US fund CBRE Global Investors was close to acquiring a portfolio. But unexpected events in the world ruined the transaction.
"At the beginning of the first wave, everything stopped, but industrial and warehouse real estate soon proved their indispensable position in the infrastructure and again came out victorious," said Jakub Holec, head of the 108 Agency consulting company, about the transaction.
"Although the pandemic slowed down the transaction by half a year, and the CBRE GI withdrew from the deal because of it, other players immediately emerged who understood the crisis as an opportunity," he added.
According to the fund buyer, the price of EUR 113.2 million is under an independent portfolio valuation, which set the price of the real estate package at EUR 115.6 million. Likewise, the achieved annual return for the buyer of 6.7 percent is above the best returns on the market.
For example, according to consultants from the JLL company, currently the best returns for premium real estate are 5.5 percent. As in the case of bonds, for example, a lower yield in real estate means not only a higher price of the purchased asset, but also a lower degree of risk.
Nevertheless, according to an industrial real estate specialist, the transaction between Arete and the Australian fund is a good result. "This is primarily a regional portfolio in the Czech Republic and Slovakia, where the yield achieved confirms the mood of investors to invest in this type of real estate," says Holec from 108 Agency. "Due to the lack of opportunities and the hunger of investors, Arete managed to reach a very interesting exit, I would say above standard," he added.
The Czech Arete Group was established in 2014. The core of Arete funds' investments is industrial real estate. The currently sold portfolio is from the second Arete fund. The company also opened a third fund this year, preparing large investments.
Cromwell European Real Estate manages a portfolio of 95 properties worth over two billion euros. The properties are located in Western and Central Europe. The group has not yet worked in the Czech Republic.