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The Kaesteker family, the founders of E5 Mode in the late 1970s and a pioneer in the development of retail warehouses, exchanged 27 stores for a 4.4 percent interest in the listed retail property group Retail Estates.
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‘Do you know that? You collect stamps and you miss another one. That is what these retail properties mean to us. We are happy to be able to add them.’ This is how Jan De Nys, CEO of the listed Retail Estates, describes the acquisition of Shopinvest’s 27 retail warehouses. That is the investment holding of the Kaesteker family, which founded E5 fashion and sold it at the end of 2019.
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The essence
- Retail Estates buys 27 retail warehouses from Shopinvest, the investment vehicle of the Kaesteker family, which owned the clothing chain E5 Mode until 2019.
- Shopinvest will receive shares of Retail Estates for 35.9 million euros.
- The Kaesteker family thus becomes a 4.4 percent shareholder in Retail Estates.
- Both parties strongly believe in retail warehouses, which thrived during the pandemic.
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The 27 retail properties are spread over 17 sites along major access roads, most of them in Flanders. ‘The stores are all located in the clusters where we are already present’, explains De Nys about the takeover. ‘We already have three buildings along the Rijksweg in Lokeren, for example. Adding the three from Shopinvest, we now have them all. That makes it easy to manage.’
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Only 12 of the 27 stores are branches of E5 Mode, the clothing chain that operates today is in the hands of the De Sutter family. The others are also branches of mainly Belgian chains: Gamma, ZEB, Torfs, Bel&Bo, Leenbakker, Eggo Kitchens.
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It is a takeover in kind. In exchange for the properties, Shopinvest will receive a 4.4 percent interest in Retail Estates, representing a capital increase of EUR 35.9 million. According to KBC Securities, the deal will add 2.42 million euros to Retail Estates’ annual rental income or 2.1 percent of the estimated rental income for the 2021-2022 financial year. ‘We derive a return of 6.8 percent from this, compared to 6.5 percent for the group portfolio.’
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Despite corona
‘Demand for those peripheral stores has increased strongly, despite corona’, says De Nys. ‘That has to do with the historically low rents. At the moment you pay 91 euros per square meter for a building, compared to the normal 110 to 125 euros. Many of the leases still run for five to ten years, so that rents will not rise immediately and will therefore remain attractive for a long time to come.’
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In the city centers, retail rents are ten times higher than in the periphery. In the centers they have made the mistake of turning it into a monoculture of clothing stores.
Jan De Nys
CEO Retail Estates
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And that while the traditional shopping streets in the city centers are emptying? ‘The prices are ten times higher there. In the Rue Neuve in Brussels, the rent rises to 1,000 to 2,000 euros per square metre. They made the mistake of turning it into a monoculture of clothing stores. They were rented out to the highest bidder, without an eye for diversity. Those were the clothing stores with their high margins. The other shops moved to the outskirts of town. The consumer is used to it now.’
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Could the advance of e-commerce throw a spanner in the works? “Like now, with free shipping and returns, it won’t last. Mixtures will arise, such as ordering online and picking up in store. You notice this in electronics stores, for example. Coolblue also operates physical stores, and Vanden Borre is expanding its fast delivery service.’
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We wanted to diversify our portfolio away from clothing stores.
Hans Van Rijckeghem
CEO Shopinvest
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Hans Van Rijckeghem, the CEO of Shopinvest, and the Kaesteker family believe in the continued success of retail warehouses. ‘That is why we became a shareholder in Retail Estates. We wanted to diversify our portfolio away from clothing stores. We used to own 100 percent of 27 stores, now we own 4.4 percent of a thousand stores, in many more markets.’
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The 4.4 percent interest in Retail Estates accounts for a third of Shopinvest’s portfolio, says Van Rijckeghem. It also has interests in retail companies such as NR4 (fashion for ladies with larger sizes) and Berden (Dutch fashion group), and in the Flemish textile company Concordia (10%). Shopinvest is a major shareholder (18%) of Smartphoto on the Brussels stock exchange, worth just under 22 million euros.
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