Praktiker retail units, IFRS
on the instructions of the ROCKSPRING PIM, a leading UK-based independent property fund manager, for reporting, accounting and secured lending purposes
Savills Hellas has been instructed to value Rockspring PIM’s “Praktiker” portfolio of DIY assets (7 big-box retail units) for financial reporting and accounting purposes and for secured lending purposes. The portfolio consisted of 7 commercial properties spread throughout the four largest cities in Greece, and more specifically, Athens (4 assets), Thessaloniki (1 asset), Patras (1 asset) and Larissa (1 asset). The properties are either situated in locations with dense urban profile or along thoroughfares mainly in out-of-town locations in the outskirts of the cities. All properties are held freehold by Cloud Hellas S.A. We need to mention that following a sale of three Praktiker stores as of Q2’09, the portfolio under valuation currently includes 4 assets.
With regards to the DIY sector in particular, this market segment is shared amongst a few major players, namely Praktiker, Alex Pak and Leroy Merlin. Praktiker should be considered offering a highly secured covenant for the Greek standards due to its mature and well developed operation as well as its broad acceptance and acknowledgment as a DIY brand in the Greek retail scene.
Praktiker Hellas S.A. is the only tenant in six (6) properties, while in one (1) units there are also tenancies with Champion Marinopoulos (supermarket) and McDonald’s (fast food). There are also a number of sub-tenancies with “Gregory’s S.A.” which operates café stores within the Praktiker stores. These sub-tenancies are held by Praktiker Hellas S.A. and they do not affect the income stream of the subject portfolio.
Savills Role:
Savills has initially conducted inspections in every property of the portfolio, while the properties are inspected on a quarterly basis by a team of surveyors of Savills Hellas Ltd. Savills is also surveying the local markets for information related to rental levels, supply and demand and trends. Information is being gathered also from both local agents in order to get a better understanding of each location’s particulars and other useful means (property websites, newspapers, magazines etc.) which are carefully analysed.
The subject portfolio has a relatively complex rent review pattern for each property which is based on different treatments of the CPI index. For this purpose, Savills has produced a thorough and well-structured in-house model in order to both notify the actual rent reviews and forecast future ones.
A detailed valuation report is being prepared for each individual property with extensive commentary regarding the local market, the tenancy schedule and the property’s qualitative and physical characteristics. In line with our instructions these reports are formed in a way that they could be used separately. As requested by our client, an Executive Summary referring to all the properties is also prepared in order to summarise the basic assumptions, the overall valuation approach, the valuation results and any other useful component.
The Investment Method is being used for the valuations and more specifically, the Short-Cut DCF approach in order to take into consideration the implied growth. The ARGUS Valuation-Capitalisation software is being used and a detailed calculations report is being produced for each property and attached in the respective valuation report.
