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TH Real Estate’s European Cities Fund acquires two trophy assets in year-end deals

The Cube

TH Real Estate has agreed to acquire the OMNi centre, a mixed-use asset in the heart of Edinburgh, from Aviva Investors. It is being acquired on behalf of TH Real Estate’s European Cities Fund, which was launched in 2016 as a pan-European open-ended real estate investment vehicle.

Totalling c.220,000 sq ft (c.20,440 sq m) of accommodation, the OMNi centre is anchored by a 12-screen multiplex VUE cinema. The scheme incorporates a number of bars and restaurants, as well as a health and fitness club let to Nuffield Health, and a luxury 77-room five-star hotel trading as The Glasshouse. The purchase also includes a 990-space underground car park, which is let to and operated by Q-Park Limited. Conveniently located to the eastern side of Edinburgh City Centre, a short walk from Edinburgh Waverley Rail Station, St Andrew Square Bus Station and the York Place Tram Halt, the property further benefits from its location adjacent to the Playhouse Theatre, and the John Lewis Partnership which forms part of the Edinburgh St James Centre (ESJ), also managed by TH Real Estate and currently undergoing an extensive development, which is anticipated to create an investment valued in excess of £1bn.

Meanwhile, the Fund has agreed contracts to acquire a c.200,000 sq ft (18,500 sq m) development project in Berlin from CA Immo. The planned office building – ‘The Cube’ - will be an iconic trophy office asset located at Washington Platz, in the prominent urban district of Europacity between Berlin main station and the chancellor’s office. The building comprises c.10,800 sq ft (1,000 sq m) retail space on the ground floor, an underground car park and ten upper office floors. Construction is scheduled to commence this month, with completion expected in 2019.

The European Cities Fund targets income-producing properties in ‘future-proof’ cities across Europe, identifying target investments that TH Real Estate believes are best positioned for long-term growth. The OMNi centre fits strategically within the target initial portfolio being assembled. Likewise, The Cube is complementary from a portfolio construction perspective, providing an opportunity for the Fund to access this key investment market at a very attractive point in the occupational market.

Andrew Rich, Lead Fund Manager for the Fund, said: "We believe the OMNi Centre is an attractive investment for the Fund due to the strong forecasted income return, high occupancy rate of over 96%, a long, well-diversified and secure rental income base, and the asset’s prime location in Edinburgh’s East End. The centre of gravity for retail and leisure activity is moving east in Edinburgh, as demonstrated by the new St Andrew Square development and Edinburgh St James (ESJ) redevelopment. The Fund is in a unique position to benefit from the ESJ development as we can work with the teams delivering this project to ensure that we remain a complementary part of the offer at this end of the City. In our view, the OMNi centre should benefit from a general uplift in footfall as the area experiences significant positive change, enhancing the desirability of the location over the medium to long term. We have also identified a number of asset management opportunities to increase income return for our investors.

"As well as being one of the fastest growing and youngest cities in the UK, Edinburgh is also the UK’s second most popular tourist destination after London. We strongly believe in the investment fundamentals of Edinburgh and feel that the OMNi will prove to be a strong asset for the Fund."

Liz Sworn, Fund Manager, added: "Berlin ticks the boxes as a future-proof investment destination by way of its growing population, increasing office workforce and as an education hub.

"The Cube represented a rare and exciting opportunity to purchase a prime office building in one of our key investment cities. Office vacancy rates in Berlin are at historic lows of 4.5%, a consequence of strong demand for space and a shortage of new office stock. We believe that the increasing shortage, particularly of modern space, should lead to a strong occupational demand for space in The Cube. Furthermore, its high-quality, sustainable fit-out spec is well aligned with our objective to create and protect assets for Tomorrow’s World. It is our belief that this will be among the best office buildings in the City when completed."


Issued by Henderson Real Estate Asset Management Limited, 201 Bishopsgate, EC2M 3BN. Authorised and regulated by the Financial Conduct Authority. TH Real Estate is a name under which Henderson Real Estate Asset Management Limited provides investment products and services. Past performance is not a guide to future returns. The value of investments and any income will fluctuate (this may be partly be the result of exchange rate fluctuation) and investors may not get back the full amount invested. Where opinions have been expressed, they are based on current market conditions and are subject to change without notice. COMP201700005

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