DEFAMA’s Gemstones Among German Commercial Real Estate

Criteria, Read

The Berlin-based Deutsche Fachmarkt AG (DEFAMA) invests specifically in small retail properties in small and medium-sized cities, predominantly in northern and eastern Germany. The most important purchase criteria are two or more chain stores with good credit ratings as anchor tenants, if possible no more than 10 tenants and an annual net rent of at least € 100 thousand. The aim is a continuous double-digit net rental return.

DEFAMA’s declared aim is to become one of the largest owners of small retail parks in Germany in the long term. The DEFAMA share is traded in the quality segment m:access of the Munich Stock Exchange as well as on the open market of the Frankfurt Stock Exchange and on XETRA.

DEFAMA has concluded a number of contracts and agreements and purchased a property, which will lead to an overall increase in annualized net rents of around € 250 thousand.

  • DEFAMA signed a purchase agreement for a local supplier near Magdeburg (Saxony-Anhalt). The purchase price is € 1.1 million, which is 10 times the annual net rent. The rentable area amounts to a good 1,000 square meters. The property is in a prime location directly on the main road in the center of the village next to the primary school, a bank branch and a physiotherapy practice and is rented to Netto on a long-term basis.
  • In addition, DEFAMA has concluded new long-term rental contracts in some existing properties. In Löwenberg, for example, a contract was signed with ALDI for an enlarged area. The building application has already been submitted, the corresponding renovation is to take place in the coming year. A contract was signed with Penny for an enlarged space in Hamm in late summer, reports the company. DEFAMA is also investing in Lübbenau, where the areas of Amplifon and the bakery are being enlarged. The total investment for all three measures is around € 2.2 million.
  • Furthermore, in the past few weeks alone, the anchor leases were extended by an average of 4 years in a number of properties. “No investments were necessary for this”, says Matthias Schrade, Management Board of DEFAMA: “This was done partly through the exercise of options, partly through supplements. LIDL extended in Waldeck and Traben-Trarbach, ALDI in Staßfurt, Penny in Rendsburg and Netto in Apolda. Including the exercise of options announced by another anchor tenant, the contracts in question correspond to around 6% of DEFAMA’s total annualized annual net rents.”

Overall, with the investments made of € 3.3 million, DEFAMA will increase rental income by around € 250 thousand p.a. The annualized FFO rises to over € 7 million or € 1.60 per share. Including the contract extensions, annual rental income totaling a good € 1.4 million is secured in the long term. This corresponds to around 10% of the total annualized annual net rents of DEFAMA and, based on the respective terms, rental income totaling over € 8 million.

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