Case study — Copenhagen
In 2011, The Fund’s investment advisers identified the Copenhagen retail market as having significant growth opportunities, offered by its rapidly growing tourism industry and high domestic spending power; It was a retail market largely under- served by international retailers.
A retail portfolio was assembled for The Fund between Q2 2012 and Q1 2014, at a time when few international investors were in the market and yields were heavily discounted, in comparison to other European capital cities.
The portfolio consists of five prime retail assets; a block of three located on Købmagergade, a prime pedestrian shopping street in the Old Town of Copenhagen, whilst 24 Cubic Property Fund | Annual Report 2017 the other two are on Østergade and Vimmelskaftet. The units are let to international retailers, including Superdry and Benneton.
Active asset management initiatives helped to further increase the value of the portfolio. The development of a new 8,000 sq ft ground floor unit within the Købmagergade property, which was completed in Q2 2016, was let to international retailer Superdry, increasing rent by 200% since acquisition.
Since entering the Copenhagen market in 2012, the local retail market has evolved due to the influx of international retailers entering the market, helping to drive the rental and capital value of the assets.
The portfolio was sold in Q1 2017 for €119m, achieving a 154% return on equity.