GERMANY – The external pension fund of KarstadtQuelle, Germany’s second-largest retailer, will receive part of the €4.5bn in proceeds from the retailer’s sale of its German warehouse portfolio.
KarstadtQuelle announced this morning that it had sold the warehouse portfolio to Whitehall, a real estate investment company which is 51% owned by Goldman Sachs, the US investment bank. The other 49% of Whitehall is owned by KarstadtQuelle itself.
KarstadtQuelle, listed on Germany’s MDax mid-cap equity index, said part of the €4.5bn in proceeds would go to its external pension fund, which is a contractual trust arrangement (CTA). The actual amount was not disclosed.
The retailer’s sale of its warehouse portfolio comes just a year after Thomas Middlehoff was brought in as chief executive to restore the company’s profitability and to get it out of huge debt. Middlehoff is a former CEO of Bertelsmann, the German media conglomerate.
UK retailer Sainsbury’s has also announced plans to use real estate proceeds to bolster its pension fund.
Speaking at a news conference in Düsseldorf, Middlehoff said today’s transaction would not only relieve the company of its debts but also “give us the opportunity to profit from future growth in the value of real estate”.
KarstadtQuelle also said that it would sell another €600m worth of German real estate holdings “in the coming months”.
Founded in 2002, the retailer’s CTA finances almost €1.6bn in group pension liabilities. To set up the CTA, KarstadtQuelle transferred €1.2bn worth of real estate holdings. According to the firm, the fund’s other holdings are simply cash.
The Essen-based firm has previously said that another €794m in pension liabilities are funded by book reserves on its balance sheet. It added that there were no immediate plans to have these covered by the CTA.
In 2005, KarstadtQuelle’s pre-tax profit under EBITDA was €544m on slightly lower sales of €15.45bn. The company has 74,340 employees, almost 8,000 of whom are outside of Germany.
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