Built in 2012, the latest-generation REWE supermarket in Kirchhain in Hesse has leasable space of around 2,200 sqm. Compared with its previous location around 150 meters away, the new building gives REWE not only a more spacious and more modern store, but also greater visibility and more generous car parking.

The second property is a specialist store center, located directly on a major artery in Treuchtlingen in Bavaria with leasable space totaling around 3,900 sqm. In addition to its anchor tenant Aldi Süd, its tenants include Rossmann, Fristo Getränke, Ernsting's Family, Takko, as well as a fast-food outlet and a hairdresser. The building stands on land measuring around 15,400 sqm, and there are plans to create around 150 car parking spaces. Completion is scheduled for early summer 2013.

The GRR German Retail Fund No.1, which focuses on retail properties in the basic retail segment, is expected to grow to almost EUR 300 million in the course of the investment period of two to three years - with a target of around 70 percent of rental income attributable to food retailers. Eligible for the fund are properties ranging between EUR 3 and EUR 15 million featuring long-term leases with German food retail chains of good financial standing as anchor tenants. The real estate fund has been designed as a special investment fund under the German Investment Act. It is targeted primarily at German institutional investors.

Recently, GRR REM acquired for the fund a portfolio of nine Aldi stores in Baden-Württemberg and Bavaria as well as a local retail and services center in Erlangen with REWE as anchor tenant.

Further acquisitions are about to be completed. Susanne Klaussner confirmed the current status: "We should be able to announce further acquisitions for the GRR German Retail Fund No.1 in the next few weeks".

GRR German Retail Fund No.1, concentrating on retail property in the "basic retail" segment, should grow to almost 300 million Euro during the two- to three-year investment period. In terms of rental income, food retailers will account for around 70%. Properties to be considered will have lot sizes ranging from 3 to 15 million Euro, anchored by long-term leases to German retail food multiples with good covenants. The real estate fund is set up as a special investment trust under the German investment act and is therefore mainly aimed at German institutional investors.

Before this engagement with GRR REM, the business administration graduate (BA), who also has an MBA in international real estate management, had worked for E.ON Facility Management since 2007. At E.ON, he was team leader in Commercial Property Management with responsibility for managing commercial and residential real estate portfolios throughout Germany. Before that, the trained tax consultant, who has a total of ten years of professional experience in real estate management, was a management assistant at a Leipzig-based construction firm.

At GRR REM, Keller and his team of seven will manage a portfolio currently consisting of 310 retail properties. The properties measure 670,000 sqm in total and are valued at around EUR 1 billion.

The local shopping centre, which fills a gap in the shopping facilities in the Büchenbach district, is part of an urban planning scheme that also provides for further residential development, the construction of a community centre and a district library. The property comprises two buildings: one is a latest-generation Rewe supermarket, the other a services centre with tenants including Rossmann, Frisör Klier, a pharmacy, a driving school and several surgeries (dentist, orthodontist, physiotherapist etc.).

Further acquisitions are about to be completed. Confirming the status of acquisitions, Susanne Klaussner stated "We are confident that we will be able to announce the acquisition of 10 or 12 additional properties for GRR German Retail Fund No.1 in the next few weeks".

GRR REM has recently gained an additional subscriber for GRR German Retail Fund No.1. The new subscriber, also a German institutional investor, has taken a 30 million Euro stake. In the course of the first closing, GRR REM had already amassed 50 million Euro from the German insurance industry, so that the fund now has total equity capital of 80 million Euro. Susanne Klaussner, Chairperson of the Management Board of GRR REM, commented on the acquisition:  "With the projected 50% external financing, the Fund's equity capital, which has now risen to 80 million Euro, will allow us to acquire retail property for more than a further 100 million Euro this year."

GRR German Retail Fund No.1, concentrating on retail property in the "basic retail" segment, should grow to almost 300 million Euro during the investment period of two to three years. In terms of rental income, food retailers will account for around 70%. Properties to be considered will have lot sizes ranging from 3 to 15 million Euro, anchored by long-term leases to German retail food multiples with good covenants. The real estate fund is set up as a special investment trust under the German investment act and is therefore mainly aimed at German institutional investors.

Well-established in the location for decades, the full-range supermarket consequently extended its long-term lease.

The REWE Center is situated at Magdeburger Strasse 9, in the Bockum-Nord commercial area, close to estates of terraced houses in the Bockum, Gartenstadt and Uerdingen districts of Krefeld. The property was part of the Rockspring German Retail Box Fund, which is exclusively invested in German retail properties. CBRE acted as consultant and broker for the vendor.

Susanne Klaussner, Chairperson of the Management Board of GRR REM, commented:  "With this transaction, we are very pleased to have acquired the first property for our GRR German Retail Fund No. 1, which was recently launched in cooperation with IntReal KAG. Further acquisitions are planned in the near future, in order successfully to place the investment volume of around 100 million Euro already available. The fund assets are targeted to reach approx. 300 million Euro."

German Retail Fund No.1, which qualifies as Immobilienspezialsondervermögen (a special real estate fund) under the German investment act, is aimed at institutional investors seeking to invest in retail properties with long-term leases and stable cash flows. Over half the volume of the fund has already been subscribed by companies in the German insurance sector.

Virtually all the stores have a food retailer as anchor tenant and retail space measuring between 1,000 sqm and 5,000 sqm. Although the leasing rate currently stands at 98%, the weighted average remaining term of the 72 leases is very low at around 4 years. For this reason, GRR REM promptly resumed stalled lease negotiations and has already successfully agreed the first lease extensions with anchor tenants.

Susanne Klaußner, Chief Executive of GRR REM: "We have now viewed each property and, based on a detailed analysis of both the premises and the location, we have developed individual property strategies. I am confident, therefore, that successful lease negotiations will help us stabilize the cash flows of the portfolio and increase its value. I am personally extremely pleased to have won this engagement, because it gives us the opportunity to take full advantage of our expertise and our strengths in managing retail properties."

The fund, which qualifies as Immobilienspezialsondervermögen (a special real estate fund) under German investment law, is aimed at institutional investors looking to invest in retail property with long-term leases and stable cash flows. The minimum participation is an investment volume of 10 million Euro. The fund has already been successfully issued and launched. In the first closing, GRR REM has already accumulated 50 million Euro from firms in the German insurance industry (HUK Coburg und WPV). Property worth around 100 million Euro can now be purchased for the fund.

During the investment period of two to three years, the volume of the fund should increase to almost 300 million Euro, around half of which will be financed by equity capital. Around 70% of the rental income will come from food retailers. Risk diversification will be achieved by distributing the investment volume over approx. 40 properties and by a robust spread of business types, regions and retail groups. Properties to be considered will have lot sizes ranging from 3 to 15 million Euro, anchored by long-term leases to good covenants from the "TOP 20" of German food retailing. The average distributed yield of the GRR German Retail Fund No. 1 is forecast to be well in excess of 6% p.a.

GRR REM will be responsible for acquisition of the properties and the real estate management. The administration of the fund will be carried out by IntReal International Real Estate Kapitalanlagegesellschaft mbH, a Service-KAG (capital investment company) specialising in real estate funds. IntReal has initiated and now administers around 30 different real estate funds, with a current investment volume exceeding 5 billion Euro. Jones Lang LaSalle will assist GRR REM in the fundraising.

The interest in GRR REM's first investment fund comes as no surprise for Susanne Klaussner, Chairperson of the company's management board: "As we saw last year, the retail property segment continues to be a favourite with investors in 2012, as it is a relatively crisis-proof asset class with above-average growth prospects. The management and operations of the GRR German Retail Fund No. 1 will be carried out be two very experienced specialists at GRR REM and IntReal. We acquired around half of the more than 290 properties that we currently manage on behalf of our clients, so I am very confident that we can implement the fund's investment strategy successfully and efficiently. We are already in advanced stages of negotiation with several vendors."

GRR REM defines the term "Basic Retail" as including retailers whose product ranges mainly comprise goods for daily requirements. As well as food discounters and full-range supermarkets, they also include retail warehouse centres and local shopping centres.

GRR REM amalgamated the two units previously let to Penny and Schlecker and converted them to fit EDEKA's current market concept. Penny and Schlecker both prematurely vacated the (now fully-let) retail warehouse centre at Neumarkter Strasse 23, which has a total area of around 1,600 sq m.

Susanne Klaussner, Chairperson of the board of GRR REM, is very happy with the success of their asset management team: "Despite two tenants prematurely vacating, in a very short space of time we succeeded in attracting EDEKA as a long-term tenant of the Beilngries retail warehouse centre, which will actually strengthen it for the future."

Herdan was previously at the Business Development Agency in Coburg, where he led the business location service. The holder of a degree in business studies (Diplom-Betriebswirt FH), he also worked for GRR REM, in the area of Germany-wide acquisition of retail properties, between 2007 and 2010.

Andreas Herdan has around 15 years experience in the real estate sector. Before his period with GRR REM, his previous appointments included working as a valuer for AMB Generali Immobilien GmbH (now Generali Deutschland Immobilien GmbH). He is also an expert in the acquisition, marketing and disposal of retail properties and a qualified valuer (Diplom-Sachverständiger DIA) of developed and undeveloped properties and rental values.

Qualified as a real estate economist (IREBS) and with a degree in banking administration, Kronas has worked for GRR since 2008, most recently as Finance Manager and authorised signatory, responsible for GRR REM's entire financing and new customer business. Together with Susanne Klaussner, chair of the management board, he will continue to promote the further strategic development of the company and the acquisition of new clients.

Concurrently, with effect from 31.12.2011, the board of GRR Real Estate Management GmbH will say farewell to Dr. Matthias Hubert (36). From 2012 Dr. Hubert is to concentrate fully on his responsibilities as COO of the Sontowski & Partner group. A director of GRR Real Estate Management GmbH since 2006, he has played a decisive role in building up the firm, which now manages retail properties with a total value of more than 900 million Euro. Since 2008, together with Klaus-Jürgen Sontowski and Dr. Karsten Medla, he has been a managing partner of Sontowski & Partner GmbH, as well as other firms in the Sontowski & Partner group.

Susanne Klaussner, chair of the GRR REM management board, commented on the changes in the executive committee: "I thank Dr. Hubert for his consistently very congenial and constructive teamwork in the last five years. I am pleased to be able to progress the business we have developed. I am also very happy that we were able to appoint a colleague from our own management team to the directorship that has become vacant. Herr Kronas's commitment and competence, particularly in the areas of Finance Management and Business Development, will bring added value to the board."

As Head of Portfolio Management, he will be responsible for, among other things, preparing and analyzing business plans, developing models for calculating the performance and returns of the portfolios managed by GRR, as well as carrying out sensitivity, scenario, and risk analyses. The business administration graduate has been working for the company, which specializes in German retail properties, since 2008. Before joining GRR REM, Alexander Mohaupt worked in portfolio management for Hudson Advisors.

GRR REM manages over 260 properties for several institutional investors with space totaling around 580,000 m2 and an overall volume of around 900 million euro, including a portfolio of 79 Lidl supermarkets.

This retail real estate, located in Bavaria and Baden Württemberg, has an overall volume of some 70 million euro with a rentable area of almost 40,000 sqm.

Thus, GRR REM is now looking after 260 objects for various institutional investors, with a surface area of altogether 580,000 sqm and a volume of about 900 million euro, including a portfolio of 79 Lidl stores.

Mr Groß is an internationally certified management accountant and banker. His areas of responsibility include Controlling and Accounting at GRR - the integrated Asset and Property Managers specialised in retail real estate.

Until recently, Groß was in charge of fund accounting at the real estate investment and sales company of the BIH group. The Berliner Immobilien Holding (BIH) is the real estate service provider of the German state of Berlin.

At the moment, GRR REM manages real property with an overall volume of more than 900 million euro, including a portfolio of 79 Lidl stores for the Gentum KAG (Generali/Quantum).

In this interview Mrs. Klaußner describes the services and specialities GRR REM is offering and answers - amongst others - the questions which sectors currently are performing best and why so many German retailers are now looking at the sale and leaseback option.

Read the Interview with Frau Klaußner (PDF, 1,6 MB) or the complete REFIRE Report from 29.11.2010 (PDF, 210 kB)

Susanne Klaußner has a master's degree in business administration from a university of applied sciences. She continues to be in charge of the real estate management, human resources and organisation departments. Dr. Matthias Hubert is in charge of canvassing and financing while Richard von Knop represents the interests of Provinzial Versicherung.

GRR REM verwaltet aktuell Einzelhandelsimmobilien in ganz Deutschland mit einem Gesamtvolumen von über 800 Millionen Euro.

Investments in retailing real estate, especially with German retail food dealers, are increasingly the focus of institutional investors.

These properties earn a very secure cash flow over other real estate asset classes and they constitute a solid foundation for any portfolio due to long-term leases. The major German business groups are model rent payers. However, it was only a couple of years ago that these long-term leases with predictable performance and possibly uncertain reutilisation were one reason why institutional investors avoided this class of assets. They just did not have the imagination and upside potential. After all, in times of crisis, properties rented over the long term with guaranteed rental payments are becoming interesting for investors once again particularly because there is a constant demand for specialised chain store operators that are available for post-utilisation of areas and also have first-ranking creditworthiness. That means that the risk of re-letting has dropped dramatically.

This is why at first glance classical discounter locations and local supply centres look like self-perpetuating business with a very low level of managing effort. To start off, these pieces of real estate are simply structured in building terms which raises the question as to why it would be necessary to hire specialised asset management. But you are kidding yourself if you draw this conclusion. German retail trade has highly professional real estate management that is excellently poised. If you take a little bit of time to look behind the scenes, you will quickly see that teams are at work here that have expert knowledge of managing rent and incidental expenses. Furthermore, the legal departments of these companies have sound knowledge in rental and purchase contracts. Finally, the expansion departments have a firm understanding of the market and location. Unfortunately, these highly qualified persons continue to have the problem on the investors' side of not being able to find any adequate interlocutors who delve into their issues and topics or have a comprehension of the trade. This is a lost opportunity for investors to assist and guide improvements in locations for their own benefit.

To understand the trade, you have to be familiar with its routines and difficulties. You have to know traders' interests and always be aware of the fact that that there is an on-going struggle for market shares. That means that some locations are overoccupied. To keep costs down, traders try wherever possible to unload work on owners that they are actually responsible for. If an owner does not have the needed detailed knowledge and a management that is well poised, the owner might quickly take on repairs that at closer examination are not the owner's responsibility. This places a burden on the cash flow and the real estate's annual performance.

It is just as important to have a detailed knowledge of where relocating makes sense. Every investor has to ask himself or herself at purchase what the opportunities will be for this location in the next few years, whether this potential acquisition can stand up to the competition in the long run and what re-letting scenarios are promising and at what conditions. Even the best asset management will not be able to generate a high performer if you purchase the wrong properties. Instead, you will probably experience an unmistakable drop when re-letting. Why is this the case? There is nothing as reliable in trade as change. Areas that were completely sufficient years ago have become too small. Although a location was introduced well, it will not be competitive in the long run if the areas of your competitors are contemporarily furnished in terms of size and presentation.

First of all, the customer wants a very attractive property and also wants to experience something when he or she buys either in the form of a world-class presentation of goods or just lower prices. Secondly, it must be possible to reach the property very easily and the way from the parking lot to the market has to be as short as possible. This includes easily available shopping carts to avoid wasting the customer's time.

Along with the range of products, these are all factors of enormous importance for a location to function right. Beyond this, the real estate has to work without any problems. For instance, the automatic door breaking down at the entrance usually spells out a loss in turnover. This is where the investor is responsible for immediate repair or at least intermediate action. Every minute when the trader is not earning turnover spells out a reduction in rent for the investor or a claim to compensation for damage from the tenant. This can add up to painful rights of recourse that not only have a bad impact on performance, but also on the relationship between the tenant and landlord.

It is not surprising that investors (especially those with an international background who have previously invested in other real estate asset classes) rub their eyes in disbelief when they witness the amount of incidental expenses that cannot be allocated. After all, in the trade it is generally not the tenant who pays the real property tax and insurance and some tenants pay some services, while other don't. The average incidental expenses that cannot be allocated are approximately 4%, meaning they are measurably higher than with office or residential real estate. You will have to accept much lower performance if you do not account for this in your business plan and an investment that originally seemed fantastic loses a great deal of its attractiveness. You have to have a lot of experience to know which trade group pays what costs and this should be kept in mind when arriving at the purchase price if you want to avoid having to correct your business plan later.

The retail class of assets (focusing on retail food trade) differs greatly from other classes of assets which is why investors would be wise to acquire and manage their trade real estate with the help of specialised asset managers who know the trade landscape and its peculiarities. They will be rewarded for this strategic decision with sustainably excellent performance. More and more investors have recognised this and hire specialised asset managers to manage their trade real estate. Traders are also happy about this specialisation when they have dealings with expert interlocutors who understand their needs and way of looking at things.

Immobilienbrief No. 229 Expo Real Spezial

The real estate economist (IREBS) with a master?s in economic geography previously worked at CB Richard Ellis and has experience in portfolio evaluation, market analysis and expert opinions on locations. At GRR, Tobias Stöhr will be in charge of real estate portfolios with a total volume of more than 600 million euros while managing a team of 5 co-workers.

Picture material for editors under ftp://ftp.targacommunications.de/GRR/

Erlangen, Germany, September 14, 2010 - GRR Real Estate Management GmbH (GRR REM) will be managing the property of the new regioFONDS Süddeutschland 8 for Sontowski & Partner, thus boosting the volume of the real estate it manages to 600 million euros.

regioFONDS Süddeutschland 8 has invested 30 million euros in seven fully rented retail trade markets and discounters in the economically strong regions of Bavaria, Baden-Württemberg and Rhineland-Palatinate in Germany which will go to 2025. regioFONDS Süddeutschland 8 is already the 17th closed fund set up by the initiator Sontowski & Partner GmbH.

GRR REM will be backed up by Goldbeck Gebäudemanagement in technical building management.

About GRR Real Estate Management GmbH (GRR REM)
The real estate management company specialised in retailing real estate is involved in portfolio, asset and property management along with acquisition, sales, accounting and financial services. GRR Real Estate Management GmbH has its headquarters in Erlangen, Germany and employs 17 co-workers. GRR REM's managing directors are Dr. Matthias Hubert, Susanne Klaußner and Richard von Knop. GRR REM is currently managing more than 150 properties for various investors with a total area of 370,000 square meters and a volume of just under 570 million euros.

Picture material for editors under ftp://ftp.targacommunications.de/GRR/

Website GRR Real Estate Management GmbH: www.grr-gmbh.de

These are 42 properties all over Germany primarily used in the retail trade with a total area of just under 200,000 square meters and reputable anchor tenants from the TOP 20 of the German retail trade. GRR REM's range of work encompasses both operational asset management and renting.

Susanne Klaußner, Managing Director of GRR Real Estate Management GmbH, was very happy about this exciting development: ?We are very proud that we were entrusted with this work. We are also very glad to have been able to boost the real estate assets entrusted to us to more than 500 million euros in a year that is so difficult for our sector.?

GRR REM will be backed up by Goldbeck Gebäudemanagement in technical building management.

About GRR Real Estate Management GmbH (GRR REM)
The real estate management company specialised in retailing real estate is involved in portfolio, asset and property management along with acquisition, sales, accounting and financial services. GRR Real Estate Management GmbH has its headquarters in Erlangen, Germany and employs 17 co-workers. GRR REM's managing directors are Dr. Matthias Hubert, Susanne Klaußner and Richard von Knop. GRR REM is currently managing more than 150 properties for various investors with a total area of 370,000 square meters and a volume of just under 570 million euros.

Contact (for the company):
Susanne Klaußner
Managing Director
GRR Real Estate Management GmbH
Sebastianstraße 31, 91058 Erlangen, Germany
Tel. +49.91 31.92 00 8-810
Fax +49.91 31.92 00 8-899
susanne.klaussner@grr-gmbh.de
www.grr-gmbh.de

Contact (for the press):
Jochen Goetzelmann
Targa Communications
Goethestraße 22, 60313 Frankfurt, Germany
Tel.+49.69.66 36 83 98
Fax+49.69.66 36 83 99
jg@targacommunications.de
www.targacommunications.de