Unibail-Rodamco to Enter Germany in Perella Weinberg Deal

Unibail-Rodamco SE, Europe’s largest publicly traded real-estate company, agreed to buy most of Germany’s second-biggest shopping-mall operator to gain a presence in Europe’s largest economy.

A fund managed by Perella Weinberg Partners LP will sell 51 percent of the company that controls Mfi Management fuer Immobilien AG to Unibail-Rodamco for 297 million euros ($373 million), the Paris-based acquirer said in a statement today. Unibail-Rodamco has a three-year option to buy the rest of shares for an additional 288 million euros.

The acquisition of Mfi and the purchase of a 50 percent stake in the Ruhr Park mall in Bochum not owned by Mfi will give Unibail-Rodamco six shopping centers in Germany valued at about 1.5 billion euros. Mfi is building four more malls in the country with an estimated value of 530 million euros and manages 20 centers for other companies.

“With no presence to Europe’s strongest economy, this move makes sense,” said Robert Duncan, an analyst at Jefferies Group Inc. with a buy rating on Unibail-Rodamco shares. Mfi is Germany’s largest mall operator after ECE Projektmanagement GmbH.

Unibail-Rodamco gained 2.4 euros, or 1.8 percent, to 138.35 euros in Paris. The shares have dropped 11 percent in the past 12 months, reducing the company’s market value to 12.7 billion euros.

Earnings Boost

The transaction values Mfi at 1.1 billion euros, including assumed debt, and the real estate generates an income equivalent to a net 5.5 percent of the purchase price, the company said.

“Unibail-Rodamco has paid a stiff price for entering Germany, but the strategic rationale had become logical, given the superior state of the German economy,” said Arjan Knibbe, an analyst at ING Groep NV in Amsterdam with a buy rating on the shares.

The acquisition will start adding to Unibail-Rodamco’s recurring profit per share immediately, the company said without being more specific. Recurring profit is defined as earnings excluding changes in the value of properties and interest-rate derivatives.

The price reflects competition between investors for retail assets in Germany, where shoppers have less debt than those in most other European countries, there is a low provision of shopping centers relative to the size of the population and exports are enabling the economy to grow.

Sales Proceeds

Unibail-Rodamco is investing the proceeds from disposals of smaller centers or malls with limited scope to generate more rent. The company raised 1.3 billion euros from divestments last year. Chief Executive Officer Guillaume Poitrinal has focused on owning large shopping centers, with big-name brands, that dominate their region

The French company is also planning to enter Portugal through the acquisition of Almada Forum and Forum Montijo from a fund controlled by Frankfurt-based Commerzbank AG, according to two people with knowledge of the transaction, which is under negotiation. An informal agreement has yet to be signed.

Leon Bressler, a former Unibail-Rodamco CEO, is a partner at Perella Weinberg in Europe and Mfi’s deputy chairman, which probably gave Poitrinal “privileged access” in the deal, Knibbe at ING said.

Bressler “is very well placed to know what Unibail-Rodamco can do,” Poitrinal said at a press conference in Paris today.

Perella Weinberg Real Estate Fund I, the European fund run by the New York-based investment bank established six years ago, acquired its controlling stake in Mfi in 2010. The balance is owned by Chairman Roger Weiss, who founded the company in 1987.

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