MSREI creates second Europe venture for G7

Morgan Stanley Real Estate Investing has teamed up with German retail real estate investment and development firm Redos Real Estate to ‘invest several hundred million Euros’ in retail properties in Germany. The partnership, MSREI’s second struck this year in Europe, has started with the €150 million purchase of a 23-asset strong portfolio.

Morgan Stanley Real Estate Investing (MSREI), the real estate investment arm of Morgan Stanley, has formed a joint venture with Hamburg-based investment and development firm Redos Real Estate for a two to three year investment programme.

MSREI will invest capital via its Morgan Stanley Real Estate Fund VII Global fund, the latest in its global series of opportunity funds which held a final equity closing of $4.7 billion in May.

The partnership with Redos, which manages a portfolio of more than 100 assets valued at approximately €1 billion, is the second retail joint venture struck by MSREI on behalf of the fund, known as G7.

In March, MSREI teamed up with NewRiver Retail, the AIM-listed company set up by Halladale founder David Lockhart, to spend up to £250 million (€288 million; $397 million) on UK retail properties.

Thomas Hartl, country head for real estate investing in Germany at Morgan Stanley said: “The joint venture combines the local retail know-how of Redos with the financial strength and global expertise of Morgan Stanley Real Estate Investing. We consider retail in Germany a very attractive asset class and
are looking forward to working together on further deals.”

The joint venture has started with the purchase of 23 retail properties, predominantly in the Bavaria area, from a group of private investors. MSREI declined to divulge a purchase price, but it is understood to have been approximately €150 million.

The assets include hypermarkets and comprise 200,000 square metres of leased space.

Further acquisitions in “specialist store centres and self-service department stores” amounting to “several hundred million Euros” is planned by the partnership over the next two to three years.

Oliver Herrmann, managing director of Redos, said: “We are happy that we have won a financially sound partner with Morgan Stanley in order to acquire promising properties on a large scale. Particularly in the current situation, there are many excellent opportunities to be found all over Germany.”