EQT makes first retail RE investment

The new deal represents an expansion of the Swedish alternative investments firm’s property platform, which has focused primarily on office investments.

EQT Real Estate has struck its first retail real estate deal as it continues to further expand its platform in the asset class, PERE has learned.

The Stockholm-based firm has acquired Allee Center, a neighborhood shopping center in Leipzig, Germany. The asset, which was understood to have traded for approximately €100 million, was purchased from Investa Real Estate via Colliers International.

The Allee Center represents EQT’s eighth investment to date and third in Germany through its debut real estate fund, EQT Real Estate I. The property was built in 1996 and encompasses around 430,560 square feet of rental space.

“Retail is currently an un-loved asset class but if you can focus on the real estate fundamentals then value can be found,” said Robert Rackind, partner and head of EQT Real Estate.

Rob Rackind

However, he said the transaction was more opportunistic rather than thematic. EQT Real Estate focuses on value-add investments in assets that are located near, and or, on a transport hub, in markets benefiting from strong demographic and employment growth.  Through hands-on intensive asset management, the firm aims to convert acquired properties into institutional Grade A product.

“Although retail isn’t a key strategic asset class for us, Allee is a daily needs community retail centre which benefits from the above key characteristics, playing into our wider value-add strategy,” Rackind said.

EQT has primarily invested in office real estate investments, including its first acquisition of an office refurbishment project in Paris in July 2016. However, the firm also ventured into other property types, such as the purchase of Hönsfodret 1, a mixed-use property comprising both a school and office space in Stockholm in May; as well as the acquisition of an ownership stake in a multifamily development site in the Stockholm suburb of Täby. The latter transaction marked the launch of a residential programmatic platform in Sweden.

EQT Real Estate is the property arm of Stockholm-based alternative investments firm EQT, which has three primary investment strategies: private capital, including ventures, mid-market and equity; real assets, including real estate and infrastructure; and credit.

EQT established its real estate platform in February 2015 and launched EQT Real Estate Partners I that same year. The firm, which closed the fund on €420 million in June 2017, targets direct and indirect controlling investments in real estate assets, portfolios and operating companies where value can be created through repositioning, redevelopment, refurbishment and active management. The investments typically range from €50 million-€200 million in size.