DWS’s grundbesitz europa has sold Premier Outlet Budapest, the 23,000 sqm outlet center at the M1/M0 junction in Biatorbágy, to Futureal. The deal closed in October. Neither side has disclosed the price, but DWS valued it at €89.95 million as of a valuation it filed on 30 September. That of course isn’t evidence of the price, and nor is Green Street’s headline putting it at €91 million.
What’s more interesting is the context the deal takes place in. As I just wrote in my weekly newsletter ThePrime Wrap, October was a busy month at DWS. On 5 October it announced the acquisition of Peakside Capital Advisors, a value-add and opportunistic manager with serious CEE (and German) real estate know-how. Three days later the Premier Outlet sale was filed with Hungary’s competition authority, which reportedly cleared the transaction five days later.
The bombshell landed on 26 October, when DWS told grundbesitz europa’s investors it would pay out only 10% of each redemption order from 28 October. That made it the first gate at one of Germany’s four big bank-distributed property funds.
A gated fund has 12 months to raise cash for the next round of redemptions. That gives management some breathing room for orderly sales, but leaves little time to wait for a better market. What’s interesting about grundbesitz europa’s sale of the Budapest mall is that it was just one of a reported 13 the fund has made this year. Documents suggest it’s raised north of €880 million. The fund bought Premier Outlet Budapest in April 2018.
With €4.3 billion under management in September (half the 2022 figure), grundbesitz europa still holds four buildings in Poland worth €524 million, including Focus and almost half of Rondo 1 in Warsaw.
For Futureal, which bought through its Futureal Commercial 1 fund, the deal is a turn from development to income-producing property. Co-founder Gábor Futó says Hungary’s appeal to international investors has “skyrocketed” since the April elections, pointing to a 50 bps drop in the country’s CDS spreads and a 10% stronger forint. CIO Oliver Treiber says that as the market becomes more predictable, “the pricing of income-producing properties can at times offer a more attractive risk-return profile than a new development.” He expects further acquisitions.
The outlet center is 99.7% leased across more than 90 stores, including Nike’s largest outlet unit in Central Europe. FREY keeps running it day to day; Futureal will be taking over asset management.
REM Group developed the center in two phases from 2004 and sold it in 2006 to the Aviva Central European Property Fund.
In Hungary, Germany’s public open-ended property funds have been whittled down to two buildings worth about €58 million: Mom Park in Buda, held by DWS’s sister fund grundbesitz global, and Deka’s Atrinova on Bajcsy-Zsilinszky út.
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