Geneva, the 17th of November 2020
AB Alternative SICAV-SIF European Real Estate Fund, an open-ended Luxembourg based fund that invests in commercial real estate in Western Europe, has recently renewed the lease with one of its Dutch tenants, Scotch & Soda, for an additional period of 7.5 years following an initial 6 year lease contract.
Scotch and Soda, founded in 1985, is a company designing and commercializing fashion apparel. It offers clothing, footwear, accessories, and fragrance. The company operates a network of offline stores as well as an online shop providing international shipping. As of 2020, Scotch and Soda owns and operates over 245 official stores and is displayed in over 7’000 stores worldwide. The company is ultimately owned by a US private equity firm, Sun Capital Partners.
Ideally located close to Amsterdam international airport, Schiphol, the fund acquired the asset in June 2017 at an attractive investment yield. The property consists of 9’514 sqm split into warehouse, offices and a showroom, which displays all clothing collections for Europe.
Scotch & Soda was directly affected by the first lockdown last spring as most of shops were closed across the world. In those difficult times, the portfolio management team decided to provide temporary incentives in exchange for a lease extension. Following further negotiations, a lease renewal for a period of 7.5 years has been signed , which will ultimately increase the value of the asset and sustain our distribution target for an extended period.
This asset management work is part of our strategy to further increase the value and the weighted average lease term (“WALT”) of the fund, which now stands at c. 7 years. Daniel Deléchat, Head of Asset Management at Arab Bank (Switzerland) Ltd., comments on this excellent result: “thanks to our active asset management and multiple targeted lease renewals achieved this year, we have been able to extend the WALT of the fund from 5.9, as of December 2019, to more than 7 years in November 2020, which will increase the marketability and fair market value of our assets.”