Signature and Davy chase €700m retail deal

Signature Capital and Davy Stockbrokers are pursuing a €700 million retail portfolio in Germany, which they claim would be the largest European property deal completed by Irish investors.

The identity of the vendor has not been disclosed, but the portfolio includes a number of large shopping centres in Germany. The bid would be backed by Clarendon Properties, the investment vehicle of developers Paddy McKillen and Tony Leonard.

The same consortium was the underbidder in another large German property deal, its members said yesterday. Last December, the consortium submitted a bid of more than €380 million for a portfolio of high street retail properties.

It comprised 34 retail properties across Germany, 33 of which are leased to C&A, the Dutch retailer. They were being sold by Redevco which manages one of the biggest property portfolios of commercial real estate in Europe.

"The Irish consortium were one of the four bidders short listed for the final phase of the 'project Rhein' transaction but were second to a company connected to the Reuben brothers that paid up to secure this very high quality portfolio," they said yesterday.

Clients of Davy and Signature Capital, including Clarendon Properties, were providing equity for the project. Signature Capital is chaired by businessman Ronan McNamee, one of the founders of the Cusine de France business, which was sold to IAWS for €65 million in 1997.

It specialises in property-based investment opportunities for private clients. The group said yesterday it has acquired close to €100 million of commercial property in Germany over the last six months and expects to transact deals in excess of €250 million in Germany in the coming year.

Earlier this year, Signature Capital launched a German residential property fund, with primary focus on Berlin.

Meanwhile, the German retail giant KarstadtQuelle said yesterday it had sold its property portfolio for €4.5 billion to a joint company and would get an immediate cash payment of €3.7 billion, enough to eliminate all financial liabilities.

Shares of KarstadtQuelle, which is Europe's second biggest mail order company and Germany's largest department store operator, were up 2.2 per cent at €23.15 soon after the market opened. The midcap MDAX index was up 0.1 per cent.

The company, which embarked on a restructuring in late 2004 to increase sales and stem ballooning losses, said it had sold its real estate portfolio to a joint company owned by Whitehall, a property fund owned by investment bank Goldman Sachs and KarstadtQuelle. Whitehall will own 51 per cent of the portfolio and KarstadtQuelle will own 49 per cent, KarstadtQuelle said. The portfolio includes 85 department stores, 29 parking lots, 12 sports shops, 15 office buildings and 33 other properties, KarstadtQuelle said.

Middelhoff became chief executive last May and since then has raised more than a billion euros by selling smaller department stores and specialised shopping chains. The company has also shed some 25,000 employees.