09 Jun The Sunday Times: Investment fund’s supermarket sweep paying off
Focus on German shopping centres anchored by food chains is at heart of Greenman’s Covid recovery
When Covid-19 descended on Europe in March 2020, retail landlords, forced to renegotiate leases and give payment freezes, were probably wondering why they entered the sector in the first place.
One Irish landlord had a different take. For Greenman, a real estate investment fund manager, the pandemic reaffirmed its strategy, so much so that late last year it made three more investments which brought its assets under management to more than €1 billion. “Our strategy is simple,” said Catherine Choo, the company’s chief information officer. “All of our investments are in Germany and all in retail centres anchored by German supermarket chains.”
The company’s tagline is: “There are 84 million people in Germany. They all have to eat.”
James McEvoy, head of acquisitions at Greenman, said it chose Germany as an investment market because of the stability of the economy. “Investors like to put their money into the country because Germany will get out of any downturn the quickest,” he said.
In the four weeks that Germany was locked down in March 2020 Greenman’s rent collection levels dropped to 86 per cent but shot back up to 91 per cent within the month. Now they stand at 98 per cent. “It’s not the sexiest asset in the world. It’s not an office tower in Dusseldorf or Frankfurt but it is an asset that is tight and secure for investors and that’s what we’ve been doing since day one,” McEvoy said.
The company was set up in 2005 by the financial advisers Peter O’Reilly and Johnnie Wilkinson, who started to invest in properties right across Germany. The investments tend to be local neighbourhood centres, anchored by chains such as Aldi, Edeka and Rewe.
Many are in developments that are already operational and occupied, though some deals are done on properties that have yet to be built.
The company made its latest investments — the purchase of three retail parks for €90 million — through its Open fund, a regulated fund set up in 2014. Greenman limits its debt gearing to 50 per cent, and spends anywhere from €5 million to €70 million on each property. The company, which employs more than 60 people in Ireland and Germany, also manages the properties. It isn’t keen on making “a quick buck” by buying properties and selling them within two to three years. The long term investments tend to have a yield of about 6 per cent.
The vast majority of its investors are Irish. Investors must invest a minimum of €125,000. The company is on Aviva’s Self Directed Investment Option platform, which means it can take a minimum of €15,000 from pension investors.
Greenman’s plan now is to grow its assets under management to €3 billion by 2027. “They say getting to the first billion is the hardest,” said McEvoy.
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