Hornbach Enters 175 Million Euro Sale Leaseback on Eight Stores in Europe

Irish Times - December 7, 2005

Anglo Irish Bank has made a major property acquisition in Germany with the purchase of eight DIY stores for in Germany for Euro 175 million. The deal ranks as one of the largest international transactions this year by Irish investors and is Anglo Irish Bank's first foray into the German market. The bank bought the portfolio of eight retail warehousing outlets from the DIY chain Hornbach in a privately negotiated sale and leaseback deal.

Anglo Irish Bank says it intends to recoup the money by raising three-quarters of the equity from its private client base. Anglo Irish Bank's partner in this venture, Taurus Investment Holdings, will fund the remaining quarter. The portfolio will return a net yield of just under 7 percent with rent adjustments linked to inflation. Leveraged returns are expected to be between 10 and 12 percent per annum. Yields in the German property market are significantly higher than the UK or Ireland.

Hornbach is Germany's third largest DIY chain and is part-owned by B & Q's parent company, Kingfisher. The retailer, which is listed on the Frankfurt stock exchange, has 88 stores in Germany and a further 29 across Europe. It has occupied the eight properties involved for the past 15 years but decided to sell and lease them back in order to fund an expansion drive on the Continent.

The retail warehousing outlets range in size from 14,864sq m to 18,581sq m (160,000sq ft to 200,000sq ft). Six of the outlets are located outside major German cities while two are in Sweden and Holland. Together, the properties generate an annual rent roll of €13.1 million or just under €108 per sq m (€10 per sq ft). Sphere: Related Content