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The acquisition was made in a joint venture with the vendor, French REIT Mercialys, which is retaining a 30% stake in the assets. The joint venture has an initial term of six years, during which time a sale of the investment requires the consent of both parties, Schroders said.
 
The combined purchase price (including costs) for the 70% interest is €43.2 mln, reflecting a net initial yield of 5%.

The assets are 100% let on the basis of a 12 year commercial lease to hypermarket group Casino and Boulanger, subject to market standard break clauses.
 
The acquisition is in line with the company’s strategy to acquire dominant retail investments in growth regions, the trust added.
 
'We are pleased to have secured this off-market opportunity in a sector that has been notoriously difficult for pan-European investment funds to access effectively. It is a strong addition to the portfolio and adds further diversification at the same time as maintaining a foundation of long term income for the Company,' said Julian Berney, Non-Executive chairman.
 
Tony Smedley, head of Continental European Investment at Schroder REIM added: 'Against the background of the significant changes taking place in the retail markets across Europe, we have been focusing on sub-sectors which we believe are likely to be less impacted by the shift towards e-commerce, together with those locations which are dominant in their catchment. These two investments fit such criteria and are a positive diversifier to the existing retail assets in Berlin and Frankfurt.'

Following this transaction, the company has invested over €150 mln of capital at a blended net initial yield of approximately 5.6%, completing the deployment of the initial equity. The portfolio now comprises seven assets located in key target markets of France and Germany.

'We are in negotiations to draw debt against selected assets in the portfolio, which will be accretive to shareholder returns,' noted Smedley.