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The investment in the construction of a retail park in Nitra represents an attractive opportunity for investors, which is not commonly available on the market. Investors have the opportunity to become co-owners of 90% of the lucrative project and share in the profits from the sale and lease of the property. 

The investment structure includes Crowdberry investor protection in the form of liquidity preference, yield preference as well as a project cost guarantee. 

The investment comprises approximately 20,000 sqm of land and approximately 4,000 sqm of rental space. A 20-year lease has already been signed with supermarket operator TESCO for more than 50% of the lease area, which ensures a stable and long-term income.

In addition to TESCO, the tenants will include other renowned international brands such as Sinsay, Pepco, DM Drogerie and SuperZOO, which increases the attractiveness and value of the project. 

About the investment opportunity

The developer involved in the implementation of the project is KLM real estate, which has more than 20 years of experience in the development market, a strong team and 37 completed projects with a total value of €250 million. This includes 28 retail parks with 41 tenants in 202 rental units.

KLM real estate has made a number of successful sales: in the retail parks sector it sold a portfolio of 10 retail parks with a total leasable area of 39,000 m² in 2018 and 2019 to Tatra Asset Management. It also sold nine properties between 2014-2023 to the funds of the investment company 365.invest. 

The sale to 365.invest also included two properties in which Crowdberry investors invested in 2020. By selling the properties, the investors achieved an average annual return of over 15%; the expected return on the 2020 investments was 11-13% per annum. 

Why invest

3-year investment horizon with a stable yield between 11-14%.

Preference to pay 11% annual return to Crowdberry investors.

20-year (10+10 years) lease agreement with TESCO for 50% of the retail park lease area.

20% share in the profits from the development and 80% from the rental of the premises.

 Standard long-term lease agreements (minimum lease length 5 years – no termination) with reputable companies with high revenue growth.

Location with excellent catchment area and transit traffic.

Inflation protection – annual rent increases of 75% of inflation.

Mandatory buyout of Crowdberry stake after 3 years in case of lower market interest.

KLM real estate's guarantee to cover additional construction costs.

Preferential liquidity for Crowdberry investors.

Conditions for granting the investment

Type of investment: equity – co-ownership

Investment parameters

Acquisition of a 90% stake in the target company 

Use of the investment

A retail park is a type of shopping area that usually operates as an adjunct to a hypermarket or supermarket and contains between three and ten outlets. Retail parks typically have around 5,000 m² of lettable area and have a large number of parking spaces. One of several advantages over shopping centres is their location. Retail parks do not necessarily have to be located in city centres as they provide opportunities for practical and purposeful shopping. They are often located on the outskirts of towns or near busy transport hubs, which guarantee plenty of visitors.

The retail park concept has been a longstanding stable element of retail assets that is resilient to market fluctuations. Because of their performance and ability to operate outside major cities, retail parks are an attractive option for tenants. From an investment perspective, they are often sought after by investors, particularly due to their stable and long-term returns. In the past five years, up to 19 retail parks with a total lettable area of 93,400 m² have been completed across Slovakia. Retail parks are a stable part of commercial real estate investments in Slovakia (more than €100 million has been invested in this asset class in the last five years).

"Thanks to the tenant mix, they offer a stable rental yield – and the investment is cheaper than in traditional shopping centres," said Cushman & Wakefield. These projects are also appealing because of the speed of construction. While a mall takes two to three years to build, a shopping park is usually completed within 12 months. This allows developers to respond relatively quickly to retailer demand.

Market

2. Retail parks rank ahead of shopping centres 
When looking at footfall, which is directly related to the turnover of individual outlets, it is noticeable that retail parks perform better than shopping centres. According to CBRE's most recent data, retail parks are showing interesting year-on-year rental growth. In the sample studied across Europe, rental growth of up to 9% year-on-year in 2023 was recorded. Also noteworthy is the long-term stable vacancy rate. Retail parks are characterised by a stable rental mix that rarely changes. The average vacancy rate across the European sample reached between 2% and 3% in 2023, declining slightly from 2019 onwards. 
  
3. Advantages of retail parks and resilience 
The advantage of retail parks stems mainly from good transport links, free parking and convenience, as well as easy access to food and consumer products.

In 2020, the whole world was affected by the COVID-19 pandemic. The commercial real estate market was put through its paces across all sectors, with shopping malls and retail parks in particular being monitored and compared in the retail commercial real estate sector. The notional winner of this comparison was retail parks, which benefited from establishments where customers could park in front and go directly to shop. By contrast, it took people longer to return to shopping centres, mainly because of the enclosed spaces. By comparison, shopping centre turnover fell by an average of 38% year-on-year in 2020, while retail parks saw a decline of just 17%.

"Owning multiple retail parks improves the bargaining position vis-à-vis tenants. An investor with a portfolio of retail parks has more power to negotiate better terms and obtain long-term contracts with standard tenants in retail parks, which tend to be international chain retailers," says Marián Mlynárik, Senior Director of Investment Property Sales at CBRE

KLM real estate successfully implements development projects throughout Slovakia and the Czech Republic. It focuses primarily on the development of retail parks, but its portfolio also includes logistics parks, apartment and condominium buildings.

KLM real estate partners have managed to complete 37 projects in 20 years, 28 of which were retail park developments with 202 rental units (a map of completed and future projects can be found in the gallery below the article). Thanks to these projects, KLM real estate has brought a number of investment opportunities to its partners with a total value of €250 million. 

KLM real estate also has a successful track record in selling completed projects to institutional investors (Tatra Asset Management, 365.invest, P3 Logistic Parks, VGP, etc.). In 2018 and 2019, it sold a portfolio of 10 retail parks with a total leasable area of 39,000 m² to Tatra Asset Management. During 2014-2023, it sold nine properties to 365.invest funds with a total area of 29,000 m².    

About KLM real estate

KLM real estate is expanding its portfolio and plans to develop another 20 retail parks, where a total of 100 units will be for lease and 10 new companies will be added to the client portfolio. KLM real estate reference projects include a retail park in Zvolen, a retail park in Dunajská Streda and a logistics park in Žilina. The client portfolio includes a number of major companies in the retail, logistics or delivery services sectors.

Member of the Board of Directors of KLM real estate a.s. responsible for finance and economics. He has been involved in real estate and property development for almost 10 years.

Member of the Board of Directors of KLM real estate a.s. responsible for the technical area, preparation and construction of projects. He has been involved in real estate and development since 2004.

Member of the Board of Directors of KLM real estate a.s. responsible for sales and expansion. He has been involved in real estate and development for almost 20 years.

Team

1. Investment – acquisition of a 90% interest in a property    

Crowdberry investors have the opportunity to become co-owners of a building plot and development of a retail park in Nitra, and participate in the profits from the development and rents. The plan is to jointly own the property with the developer for 2-3 years and then sell it at a higher price as part of a package of a broader portfolio of properties that KLM real estate owns, along with future projects that it is preparing for development. In the event that a sale does not materialise within 3 years, KLM real estate a.s. is obliged to purchase the stake from Crowdberry investors according to pre-agreed parameters. The investment structure contains a number of protection mechanisms for both the deposit and the investors' projected profit, see below section "Investment Security and Control". 
  
2. Preliminary investment schedule

·       Crowdberry Investor Access: 07-08/2024

·       Retail park ownership: 2024 - 2027

·       Park sales on the market/exit investment of Crowdberry investors: 2026-2027

3. Project status when Crowdberry investors enter

·       Lease agreement with TESCO for more than 50% of the retail park area

·       Lease agreements for 75% of the area

·       Binding offer from the bank

The retail park is located on the main road No. 64 with a catchment area of 15,000 inhabitants with transit of over 23,000 cars per day in Nitra, in the city district of Dolné Krškany. 

The land is also located 5km away from the nearest retail centre on the main road towards Šurany and Nové Zámky, in an industrial logistics area with 10tkami major companies.

The attractiveness of the location is also confirmed by the signing of a 20-year lease agreement with TESCO supermarket. 

·       11% p.a. return and investment preference 

·       Mandatory buyout of Crowdberry's stake after 3 years in case of lower market interest

·       Maximum amount of construction costs and coverage of any fines from the development

·       Return of Crowdberry investment + 3.0% p.a. in case of failure to meet milestones

Project retail park Nitra

Crowdberry investors' contribution will be paid out of pre-KLM real estate a.s. profits, reducing the risk of losing the value of the invested capital.

Control of changes to the parameters of key contracts and changes to the business plan, as well as the necessary approval of the Supervisory Board, ensure the controlling position of investors. If the property is not sold within 3 years, KLM real estate is obliged to purchase the stake from Crowdberry investors according to pre-agreed parameters and minimum price, with protection of both the deposit and the return to Crowdberry investors, with a minimum return to investors of 11% per annum.  

Option to take control of the sale of the property in the event of a default on the KLM real estate a.s. buyout guarantee – on a sale in this scenario, the preferential liquidity for the Crowdberry investors will also extend to the return that the Crowdberry investors would have achieved on a mandatory buyout by KLM real estate a.s. For more information and the minimum sale prices at which Crowdberry investors will receive (i) their investment + the yield (ii) their investment, please refer to the Investment Information (IoI) document.

A future contract is concluded with a creditworthy tenant for a period of 20 years who cannot terminate the lease early.

This represents the risk of selling the project on the market and secondary occupancy of the hall in the event of a tenant failure. In case of unsuccessful sale after 3 years, KLM real estate a.s. guarantees the purchase of the project at the exit yard value of 7.2%.

Risk associated with construction, e.g., budget increase or extension of construction. The general contractor will be a reputable construction company, the works contract will be for a fixed price for the works and a fixed delivery date. Upon completion, the general contractor shall provide warranties.

The risk of the budget being under-financed from bank sources is minimised. Crowdberry only releases capital after receiving approved bank financing.

Project management risk is minimised by nominated managing directors with clear powers. Supervisory Board approval is required for any deviations from plans. If a managing director breaches the powers, Crowdberry has the right to replace the managing director with its nominee.

Crowdberry's investment is conditional on obtaining a final planning permission. In case of delay in obtaining the approval decision, any penalties applied by the tenant are paid by KLM real estate a.s.

A detailed description of the risks is part of the investment documentation.

Risks

Investment Campaign ends 30 September 2024 
The investment opportunity in the target company is made possible by Crowdberry Investment Platform j.s.a.

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KLM retail park Nitra

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Peter Povala

Commercial property from KLM with high security and creditworthy tenants

Crowdberry investors have already invested over €65 million in over 40 companies.

Successfully funded companies

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