KarstadtQuelle sells real estate for €4.5bn to cut debt

27 Mar '06

2 min read

Struggling German retailer KarstadtQuelle AG has sold its department store real estate portfolio worth €4.5bn to a joint company of Whitehall (51 percent of capital), a property fund owned by US investment bank Goldman Sachs, and KarstadtQuelle AG (49 percent of capital), effective March 27th 2006.

KarstadtQuelle AG, together with its pension fund, will receive an immediate cash payment of €3.7bn. It expects an additional €0.8bn from the participation in the potential appreciation of these real estate assets. Independent from this transaction, an additional €0.6bn is expected to be realized over the coming months through the commercialization of further properties, such as office buildings, land and others.

With this, the KarstadtQuelle Group management has successfully accomplished the optimization of its real estate assets much earlier than planned. An assessment of the various options – that was implemented swiftly and supported by investment bank Rothschild – came to the conclusion that the now chosen option provides an ideal structure and helps to increase the total value of the Karstadt Quelle real estate portfolio to approx. €5.1bn.

The management of KarstadtQuelle believes that its department store real estate property has a high value appreciation potential. In light of this, the management decided to chose a strategic option that, on the one hand, provides the inflow of cash through a sale and allows the complete redemption of group financial liabilities and, on the other hand, safeguards the further participation in the value appreciation of these real estate assets.

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