GRR Group Grows with New Real Estate Fund / Local Shopping Properties in Demand as Anchor Investment in Economic Downturn
Nuremberg, Germany, 21.11.2022: Despite the economic downturn, the GRR Group is successfully continuing its growth course. In the financial year 2021/2022 (reporting date 31 May 2022), the consolidated result of the leading Nuremberg-based company specialising in local shopping properties rose by 32.4 percent from 6.8 to 9 million euros. The total turnover of the group remained stable at 22.3 million euros in the same period. The number of employees increased compared to the previous year to currently 85. They manage around 500 local retail centres, food retail markets and discounters nationwide with a total area of over one million square metres.
The Group's strong result was made possible by further increases in rental income and strategic sales of properties with a negative profit contribution from the portfolio. This made it possible to realise considerable savings, and the funds are now available for new acquisitions. Due to these sales, the market value of the retail properties held in GRR’s own portfolio fell by 4.1 percent to 188 million euros, while the volume of assets under management remained at the previous year's level of approximately 1.95 billion euros. The properties are held in the Group's property companies in five self-initiated open-ended special AIFs as well as in the specified investment structures for individual mandates.
High quality of the portfolio drives result
"In the current market environment, we are benefiting from the high quality of our portfolio and the anchor function of local shopping properties. The successful implementation of our sustainability strategy and the associated investments in our portfolio properties contribute significantly to this result. Accordingly, we are very satisfied with the business result at group level. At the same time, we hope that investors will soon put their current reluctance regarding new acquisitions behind them. Our new fund, for which we only acquire properties selected according to strict environmental criteria, is very well received in the market. After all, local food retail suppliers are particularly stable in value as an investment if they are sustainable. Demand from our investors remains high," explains Martin Führlein, member of the GRR Group's Board of Directors.
New GRR fund successfully launched
The first property for the GRR Future Retail Properties 1 fund, which was launched in summer, was acquired in November: a modern store of the EDEKA subsidiary and discount brand Diska in Schorkendorf, Bavaria, which will be completed in 2022. Further acquisitions are about to be concluded. GRR Future Retail Properties 1 is designed as a special AIF for institutional investors and only acquires properties in the food retail sector that meet verifiable ESG criteria. The fund thus fulfils the requirements of Art. 8 of the Disclosure Regulation. For this purpose, the GRR Group has developed its own ESG scoring model together with the consulting firm imug. ESG stands for Environment, Social and Governance, whereby the GRR Future Retail Properties 1 has an environmental aspect, namely the improvement of climate protection, as its objective. The investment volume of the fund is 350 million euros, the equity capital is 200 million euros. The target return is 4 percent. 51 million euros have already been subscribed as part of the first closing.
Equipped for the future
The transaction volume declined further in the past financial year against the backdrop of the effects of the Covid 19 pandemic, the competitive environment and the sharp rise in interest rates in the second half of the financial year. At the same time, the path of consolidation was successfully continued and the share of debt in the own portfolio was further reduced.
"We are very well equipped for difficult times and can act quickly once the market situation has stabilised again. Meanwhile, we are sticking to the strategy of investing specifically in the appreciation and further development of the properties we hold. In this way, we increase the value of the properties and thus also the market value of our portfolio," emphasises Board Member Andreas Freier.
ESG turnaround with solar energy
Even before Russia's attack on Ukraine and the resulting drastic increase in energy costs, the GRR Group focused in particular on the sustainable development of its local supply properties. Together with WI Energy GmbH, it began to install rooftop photovoltaic systems on existing properties. So far, 19 roof surfaces have been equipped with PV systems. The area of the installed modules corresponds to a total of about 23,000 square metres, and the output is about 4.1 MWp. About 4,000 four-person households could be supplied with the approximately 4,000,000 kWh of electricity generated per year. With the current electricity mix, this corresponds to an annual CO2 saving of around 2.57 tons.
"The energy transition must succeed in all areas of society and the economy. The building and real estate industry has a key role to play here. This starts with building materials and insulation, and includes energy costs in ongoing operations and the preference for regional products instead of climate-damaging imports from all over the world. The GRR Group can realise potential for improvement through energy-efficient refurbishment and the increased use of renewable energy sources, and also by ensuring that only new buildings that meet green building standards can be considered for our funds. In this way, we are also sending a signal that the climate goals can also be achieved in the real estate industry," Andreas Freier says.
New business premises reflect the growth course
Against the backdrop of the GRR Group's ongoing growth, the company's head office is due to move to new, modern premises in the Marienberg Campus of the Dr. Lorenz Tucher'schen Stiftung in Nuremberg at the beginning of the year. From January, the 85 employees will move into their new offices with a view of Nuremberg's Kaiserburg and the adjacent airport. The new building was constructed in accordance with the KfW Efficiency House Standard 55 and, with regenerative energy generation for heating and cooling, the extraction of service water from its own well and the embedding in a green, car-free campus, optimally corresponds to the GRR Group's sustainability strategy.
Outlook: Interest rate turnaround as a challenge
The overall successful financial year makes the GRR Group cautiously optimistic for 2023. However, the economic development is characterised by numerous uncertainties that make a forecast difficult. Although a slow decline in real estate prices is noticeable in some regions, at the same time investors' expectations of long-term yields have risen noticeably in light of growing interest rates in the euro area.
"With our focus on food retail, we are in a very stable growth environment. Local suppliers are anchors of stability in the crisis. Providing people with food is one of the most sustainable constants even in a difficult economic environment. We will continue to build on this in the coming year," Führlein emphasises.
Board of Directors, GRR Group
Tel.: +49 (9 11) 955126 200 | E-Mail: [email protected]
Eye Communications, Press and Public Relations Agency
Phone: +49 (7 61) 137 62-21 | E-mail: [email protected]
About the GRR Group
The GRR Group is a group of companies specialising in retail real estate in Germany with a focus on investment and asset management. The company is headquartered in Nuremberg and employs 85 people. The GRR Group currently manages around 500 properties for various investors with a total area of around 1,000,000 square metres and a volume of approximately 1.95 billion euros.
More information on the GRR Group is available at www.grr-group.de.
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