Canadian Pension Plan Investment Board (CPPIB)- Commercial Real Estate Case Study - Cushman & Wakefield

Largest Retail Asset Transaction in Germany


The Challenge

Cushman & Wakefield Corporate Finance Germany was exclusively mandated to advise the CPP Investment Board on the acquisition of a 50% share in CentrO, Oberhausen, the most successful shopping mall in Germany. In 1992, the Stadium Group headed by Andy Healey as well as P&O acquired a former ThyssenKrupp production facility site that included a blast furnace and steel mill.

After obtaining the building permit, Stadium began construction, using the Meadowhall shopping center in Sheffield, UK, as a reference for the CentrO concept. Construction of the scheme took 24 months and used around 105,000 cubic yards of concrete.

CentrO in Oberhausen opened its doors in 1996 and quickly became one of the most successful shopping centers in Germany. Comprising a sales area of almost one million square feet, CentrO offers more than 200 stores on two retail levels, a Coca Cola Food Court, Sea Life Aquarium, Cinestar Multiplex cinema, Koenig-Pilsner Arena, Centro Park, Metronom Theater, and the Gasometer. Some 23 million visitors enjoy the entire CentrO urban entertainment center annually, some 16 million of whom use the shopping center itself.


The Solution

Cushman & Wakefield Corporate Finance Germany introduced the scheme to the CPP Investment Board (CPPIB), a professional investment management organization based in Toronto, which manages Canadian federal pension fund assets of more than $150 billion. In turn, CPPIB instructed Cushman & Wakefield to advise it on its first large-scale investment in Germany.

A focal point of the buy-side advice was the preparation of a business plan based on a detailed cash-flow analysis. This also comprised a commercial review of the profitability of the individual tenants and their affordability, resulting in individual market rents. Using our in-depth shopping-center experience, we furthermore evaluated the current concept of the scheme as well as the extension potential from both a commercial and conceptual point of view.

On the modeling side, we carried out Discounted Cash Flow modeling and evaluated the recommended purchase price of the subject asset via business-plan creation. Additionally, we used our comprehensive retail and shopping center Capital Market expertise to benchmark the asset with other national and European shopping-center transactions.

Another important aspect was the analysis of the upside in non-recoverable costs via an analysis of the service charges and its forecasted future development, which we included in the cash flow and business plan.


The Result

At closing in mid-May 2011, the transaction exceeded a total asset volume of $1.7 billion, with CPPIB injecting equity of $355 million to acquire a 50% interest in CentrO, making this the largest German single-retail-asset transaction of recent years.