Highstreet sells another Karstadt store

The Carlyle Group has emerged as a buyer of a large department store in Germany being sold by a venture that includes Goldman Sachs and RREEF Real Estate.

Highstreet Holding, the German retail property consortium consisting of Goldman Sachs' Whitehall Funds, RREEF Real Estate, Italy’s Prelios and the Borletti Group and partner Nanz Group, have sold a department store to The Carlyle Group. Carlyle has made the investment on behalf of its €2.2 billion opportunistic fund, Carlyle Europe Real Estate Partners III.

In an announcement, Carlyle said it has bought a 182,000-square-foot department store operated by Karstadt in Esslingen, southern Germany. The private equity firm teamed up for its purchase with Frankfurt-based developer PBG and retail company 3W Immobilien and, including plans for its redevelopment, expects to invest approximately €70 million in total in the property. Financing for the property came from Kreissparkasse Esslingen-Nürtingen.

Carlyle explained how it planned, along with its partners, to refurbish the building as well as expand it by 118,000 square feet and create new residential accommodation on the site. Karstadt Warenhaus, the retailer that occupies the site, has 13 years remaining on its lease.

The Esslingen store is just one of a number of assets that Highstreet has been selling in recent times. As PERE reports in this month’s issue, just before the end of the year, Goldman and the other investors in Highstreet agreed to sell 17 assets, including the landmark KaDeWe department store in Berlin, to Austria’s Signa Holding for €1.1 billion. That sale took total disposals for a portfolio that contained around €3.5 billion in assets at the end of 2010 to just over €2 billion, with about €1.5 billion more to go.