Investing.com -- Shares of Mercialys (EPA:MERY) climbed 2% following the company’s announcement of the acquisition of the Saint-Genis 2 shopping centre in Lyon, France, from La Société Générale (EPA:SOGN) Immobilière (LSGI).
The purchase price of €146 million, which includes duties, aligns with market expectations and reflects a yield close to 7.8%-8%, according to Jefferies.
The Saint-Genis 2 shopping centre, encompassing 38,500 square meters, is situated approximately 13km southwest of Lyon. The area, with a population of 700,000, supports the centre as a leading retail destination, excluding Lyon’s city centre, hosting 100 diverse retail brands.
With a current vacancy rate of 4%, Mercialys plans to enhance the retail mix to reduce vacancies to 2%. Notably, the site includes the second most successful Auchan hypermarket of the Auchan group.
Mercialys had previously indicated during its FY24 earnings call that it was open to asset acquisition opportunities, targeting investments up to €200m with a minimum yield of 7%. The company now states that the newly acquired asset "offers an immediate yield significantly above the Company’s investment criteria."
Jefferies analysts have weighed in on the acquisition, stating, "We estimate that the Saint-Genis acquisition should be c.4% accretive to recurring EPS on an annual basis while increasing the group’s LTV by 3 points to 42%."
The analysts also suggest that the potential for rent increases could stem from a reduction in the vacancy rate rather than from reversion, adding, "The company seems to have finally switched into acquisition mode after 5 years of very limited investments. We expect the group to accelerate its asset rotation somewhat and make more acquisitions going forward."
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