Europark Prague

Background

JLL was appointed by SES Spar European Shopping Centers on a sole agency basis to offer for sale the Europark shopping centre in the Czech Republic. The envisaged transaction would encompass the sale of a majority stake on a joint venture basis in two Czech special purpose vehicles.

Europark, a modern, well-established retail centre, situated in a dynamic, densely populated residential district in the eastern parts of Prague. The centre has a catchment area of 1.5 million inhabitants, offers a GLA of 45,000 sq m and consists of three distinct parts including a retail gallery, a DIY unit and an office component. The centre has potential to drive its performance further through several management initiatives.

Strategy

The disposal campaign was launched after a preparation process during which measures were taken on an asset level to optimise the risk profile for the sale. To ensure price maximisation and deal certainty, a finance lease structure relating to the holding vehicle had to be dissolved, anchor tenancies extended as well as shortfalls from service charges and marketing costs underwritten. The expected nature of the engaged purchaser pool were “sector specialists” who seek an ongoing active asset management role in order to drive returns and hence require that “something is left on the table” for future optimisation. Thus, a conservative underwriting of the office component was carried out, and a hypermarket downsizing opportunity and future development potential of the centre were made key elements of our sales story.

Results

This transaction is testimony to JLL’s capability of identifying issues negatively impacting the overall risk-profile, selling the story on the potential of the asset to a targeted investor group.

The combination of JLL’s leading International Retail Capital Markets and Czech Capital Markets teams ensured an optimal outcome for the client. The deal was signed in December 2018, closing in April 2019. It represents a rare sale of a majority stake on a joint venture basis between a local retail specialist and a market leader in the shopping centre business in Austria and Slovenia.