Quinlan Private enters German market

Quinlan Private, Derek Quinlan's investment group, has made its first investment in Germany with the purchase of a €170 million shopping centre.

The company has bought the Neurmarkt Galerie shopping centre in Cologne on behalf of its clients, with Quinlan executives also taking part in the deal.

The centre was previously owned by a consortium comprised of a German bank, Karstadt AG, Germany's largest department store operator and Brune Consulting, the German property investment and development company.

Less than 20 Quinlan clients are thought to be involved, with the purchase likely to have been about 80 per cent funded through borrowings. This suggests that at least €35 million was drawn from the investors' cash resources.

Under the terms of the Quinlan purchase, Brune will retain a small shareholding, thought to be less than 10 per cent, as well as continuing to manage the facility. The shareholding is likely to be passive.

The initial yield on the centre is roughly 5.5 per cent, with Quinlan expecting rents to rise by about 5 per cent annually over the next few years.

The Neurmarkt Galerie is the only shopping centre in the Neurmarkt district of Cologne, close to the busiest shopping street in Germany. The city is Germany's fourth-largest and has a consumer spending level 36 per cent above the German average.

Quinlan's investment demonstrates confidence in signs that the German economy is resurging after a lengthy period in the doldrums.

Last month, statistics on economic growth and tax revenue suggested that the country was on track to meet the Maastricht deficit criteria for the first time in five years this year, a year earlier than planned.

The Galerie is a six-storey, mixed-use development that houses 16,000sq m (172,222sq ft) of retail space over three floors.

Quinlan plans to seek an improved tenant mix in the retail portion of the centre, so that any rental uplift can be maximised. The offices and the clinic are on long leases.

The firm's move into Germany is designed in part to help balance its investment portfolio between emerging and developed economies. Quinlan is particularly strong in central Europe, but less so in the older continental European economies.

Total assets under management by Quinlan Private now exceed €5 billion.