MARKET DUE DILLIGENCE

Transcription

1 MARKET DUE DILLIGENCE SAMPLES FOR THE INVESTMENT & ASSET MANAGEMENT DEPARTMENT M u e n s t e r / V i e n n a J u l y 2016

2 Copyright RegioPlan Consulting. Our general terms and conditions from 08/15 apply exclusively. The conducted calculations are based on information provided by the client (dimensioning, industry mix, tenant mix, ) as well as information regarding competitive situation, infrastructural projects etc. that are known at the time of the analysis. The realized prognosis is based on scientifically accepted methodologies, and on data related to population and economic development that was available at the time of the analysis. The actual developments in the market can however differ, particularly due to unforeseeable events that impact the national economic development. RegioPlan cannot be held responsible for such developments. The stated turnover potentials are based on the strategic planning being optimally and professionally realized, the best possible management, the client has the required expertize to be able to deliver the planned project and the realization of the proposed recommendations. The proposed turnover potential is an indication of potentially achievable turnover dimensions. RegioPlan cannot be held responsible for the turnover actually generated by the client. Economic profitability calculations are, according to the agreement made in advance, not object of the analysis. All presented market and turnover potentials as well as turnover figures of existing market participants include value-added tax, unless indicated separately. The analysis at hand serves the internal use of the client. Selling, reselling or dissemination free of cost to non-involved third parties (in particular: media and internet) is impossible and prohibited, insofar as no written permission of RegioPlan is existent. RegioPlan Consulting reserves the right to continue using general data.

3 M a r k e t A n a l y s i s S a m p l e S t u d y Initial Situation of our clients Fundamental issues that concern Investors and Asset Managers regarding Shopping Center and Retail Park investments: a b c analysis of rental income: evaluation of the expected cash flow (level, consistency, vacancies, sustainability) recommended duration of investment due to market related risks and chances evaluation of yields adjusted to investment strategy and risk classification

4 M a r k e t A n a l y s i s S a m p l e S t u d y Major Contents The client is considering an investment in an existing Shopping Center, a new Shopping Center project or a Retail Park and wants to: o o o o o understand the reliability of the projected turnover, the turnovers origin & structure and a realistic turnover forecast for single tenants understand the level of affordable rent to sales ratios of each tenant due to the changes in the market understand the mid and long term developments in the competitive market and the impacts on relevant catchment parts and markets hares within the catchments of project and in the end the impact on turnovers of the project know the optimal branch mix and tenant mix from consumers perspective and receive an objective risk evaluation of the project

5 M a r k e t A n a l y s i s S a m p l e S t u d y Table of Contents Project Overview Competitive Situation Catchment Area & Market Potential Market Shares and Turnover Potential Branch Mix and Risk Evaluation Summary and Conclusions

6 M a r k e t A n a l y s i s S a m p l e S t u d y Project Overview

7 M a r k e t A n a l y s i s S a m p l e S t u d y Project Current Status currently targeted branch mix key retail branches GAL in m² share in % food & dailies 2, % drugstore/perfumery 2, % clothing (in total)* 36, % shoes & bags 4, % sports 5, % books & stationery % children goods (clothing excluded) % electronics 2, % DIY furniture & home decoration 3, % total key branches 56, % services 1, % food & restaurants 4, % Entertainment 6, % miscellaneous 2, % total 69, % *including lingerie and children fashion **estimated, based on the currently released layout plans of the center *** estimation based on the layout plans total size of about 69,800 m² of GLA planned very high amount of GLA projected for the sector of fashion (over 50% of the total GLA) comparable total sizes of competitors: Competitor 1: 64,000 m² of GLA (incl. cinema) Competitor 2: 110,000 m² of GLA (incl. DIY and cinema) Competitor 3: 72,000 m² of GLA (incl. DIY and cinema) comparable sizes of fashion offer: Competitor 1: ~ 30,000 m² of GLA** (47%) Competitor 2: 32,000 m² of GLA*** (29%) Competitor 3: ~ 24,000 m² of GLA*** (33%)

8 M a r k e t A n a l y s i s S a m p l e S t u d y Competitive Situation

9 M a r k e t A n a l y s i s S a m p l e S t u d y

10 M a r k e t A n a l y s i s S a m p l e S t u d y

11 M a r k e t A n a l y s i s S a m p l e S t u d y Catchment Area & Market Potential

12 M a r k e t A n a l y s i s S a m p l e S t u d y Methodology: HUFF-Model Based Catchment Area usage of a classical gravitation model as profound basis for every analysis. the catchment area reflects consumer behaviour and is determined by competitor function and size of the retail zone (maximum reach by drive-time) analysed location relevant competitors by size and function (limiting intervening opportunities) maximum drive-time distance intersection of drive-time zones competitor distance to the location (different intensity zones for absorption) primary catchment area secondary catchment area peripheral catchment area

13 M a r k e t A n a l y s i s S a m p l e S t u d y the catchment area of the projected Center extends mainly on the East river bank of the city and its peripheral surrounding the peripheral area covers rural area up to a drive time of about 60 minutes to the South

14 M a r k e t A n a l y s i s S a m p l e S t u d y inhabitants in the core area ,400 (20%) inhabitants in the competitive area ,800 (35%) inhabitants in the opportunistic area ,700 (45%) note: shown figures do not correlate with sample catchment areas

15 M a r k e t A n a l y s i s S a m p l e S t u d y Catchment Area Inhabitants 2020 number of inhabitants per catchment area zone as forecast for 2020 total number of inhabitants grows by about 2.3% compared to 2015 city center loses inhabitants, while most other parts grow on population population figures 2020 catchment catchment catchment catchment catchment catchment catchment catchment catchment primary per catchment area area I area II area III area IV area V area VI area VII area VIII area IX total Inhabitants ,330 37, ,608 61,150 49, ,533 65,736 74, , ,683 1,179,890 Households ,037 11,585 74,105 17,524 26, ,783 22,160 25,689 88,165 53, ,293 avg. household size Purchasing Power Index (PPI) per Inh PPI/Inh. short-term PPI/Inh. mid-term PPI/Inh. long-term attribution to main risk class core core core core competitive competitive core opportunistic opportunistic opportunistic total catchment area 1.2 M. inhabitants primary catchment area inhabitants ~12% out of the total most populous: peripheral east inhabitants ~20% out of the total Source: RegioData Research Population and Purchasing Power 2015; own calculation

16 M a r k e t A n a l y s i s S a m p l e S t u d y Catchment Area Market Potential total stationary market potential within the catchment area in 10 key retail sectors as forecast for 2020 figures in m., net (excl. VAT), forecast in real terms (excl. inflation) market potential in M. for store catchment catchment catchment catchment catchment catchment catchment catchment catchment primary based retailing 2020 area I area II area III area IV area V area VI area VII area VIII area IX total food & dailies ,737 drugstore/perfumery clothing (in total) shoes & bags sports books & stationery children goods (clothing excluded) electronics DIY furniture & home decoration total key retail sectors ,220 total market potential 3.2 B. Euros Source: RegioPlan, own calculation highest share for grocery 1.7 B. Euros ~54% out of the total market potential for fashion 297 M. Euros

17 M a r k e t A n a l y s i s S a m p l e S t u d y Market Shares and Turnover Potential

18 M a r k e t A n a l y s i s S a m p l e S t u d y Risk Classes of Turnover Origin the origin of turnover is modelled with three different risk classes, reflecting the likeliness of its generation in contrast with the given market environment originates mainly from the core parts of the catchment area, where the projected center is definitely the first choice option for customers, without significant competition is based on stable market shares in this zones risk level: very low CORE originates mainly from the competitive parts of the catchment area, where the projected center has to cannibalize the existing malls is based on strong market shares in this zones, reflecting the strategically strong location and capability of an assumed strong market penetration through very attractive tenants risk level: medium to low COMPETITIVE originates mainly from the opportunistic parts of the catchment area, which are not in the direct influence area of the project; turnovers from there can only be achieved with a superior concept and outstanding tenants is based on still high market shares in the opportunistic areas and an additional push of market shares in all other zones to reflect the absolute maximum of possible penetration risk level: high OPPORTUNISTIC

19 M a r k e t A n a l y s i s S a m p l e S t u d y Maximum Achievable Market Shares based on the planned concept, market shares were set to illustrate the possible level of market absorption in 2020 the shown market shares reflect a maximum possible absorption from the different parts of the catchment area, based on a superior concept and outstanding tenants concerning attractiveness total market share: ~ 3.4% total fashion market share: ~ 16% maximum market shares in % 2020 primary catchment area I catchment area II catchment area III catchment area IV catchment area V catchment area VI catchment area VII catchment area VIII catchment area IX total food & dailies 8.5% 0.9% 0.4% 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1.1% drugstore/perfumery 16.0% 9.6% 6.4% 5.6% 3.2% 2.1% 4.0% 2.4% 1.3% 0.5% 4.6% clothing (in total) 45.0% 31.5% 21.6% 18.9% 11.3% 9.0% 16.2% 10.4% 5.9% 2.9% 15.7% shoes & bags 25.0% 17.5% 12.0% 10.5% 6.3% 4.3% 7.5% 5.0% 2.3% 1.3% 8.2% sports 32.0% 22.4% 9.6% 11.2% 8.0% 4.8% 9.6% 4.8% 1.9% 1.0% 9.1% books & stationery 4.0% 2.8% 1.6% 1.5% 0.9% 0.5% 1.1% 0.6% 0.2% 0.1% 1.2% children goods (clothing excluded) 15.0% 10.5% 3.0% 6.0% 3.8% 2.3% 4.5% 2.3% 0.8% 0.3% 4.0% electronics 25.0% 18.8% 5.0% 8.8% 3.8% 2.5% 8.8% 3.8% 1.3% 0.5% 6.3% DIY 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% furniture & home appliance 6.5% 4.6% 2.9% 2.6% 1.6% 1.0% 2.0% 1.3% 0.5% 0.3% 2.1% total 13.6% 6.3% 3.9% 3.8% 2.1% 1.6% 2.6% 1.6% 0.9% 0.4% 3.4% Source: RegioPlan, own calculation

20 M a r k e t A n a l y s i s S a m p l e S t u d y Market Shares Benchmarks benchmarks for regional shopping malls please note: the actually achievable market shares depend a lot on the strength of the concept in the given competitive situation the projected Shopping Center finds itself in a very competitive surrounding! total market share of regional malls % fashion market share in the primary 35 45% fashion market share in total 10 20%

21 M a r k e t A n a l y s i s S a m p l e S t u d y Maximum Turnover Potential maximum turnover potential in M. in the ten key retail sectors as forecast for the year 2020 (net values, forecast in real terms) based on the shown market potential and the shown market shares plus additional dispersed sales key retail sector turnover potential from catchment area in M. dispersed sales in % total turnover potential in M. thereof CORE thereof COMPETITIVE thereof OPPORTUNISTIC food & dailies 6.2 4% drugstore/perfumery % clothing (in total) % shoes & bags % sports % books & stationery % toys % electronics % DIY % furniture & home appliance % Total % gastronomy % services* % entertainment* % total Source: RegioPlan, own calculation; *estimation of turnover via average productivities

22 M a r k e t A n a l y s i s S a m p l e S t u d y Branch Mix and Risk Evaluation

23 M a r k e t A n a l y s i s S a m p l e S t u d y Optimal Branch Mix for the Targeted Total Size based on the calculated maximum turnover potential, the planned branch mix needs to be adapted with two main focuses: less GLA for the fashion sector while remaining dominant for the catchment area more GLA for non retail sectors in order to meet future requirements for modern Shopping Malls key retail sector currently planned GLA optimised GLA per sector change compared to per sector in m² in m² current plans in m² food & dailies 2,000 5,000 3,000 drugstore/perfumery 2,500 2,500 0 clothing (in total)* 36,000 28,000-8,000 shoes & bags 4,000 6,300 2,300 sports 5,000 5,000 0 books & stationery children goods (clothing excluded) 600 1, electronics 2,400 3, DIY 0 0 furniture & home appliance 3,800 3,800 0 total 56,800 55,500-1,300 services 1,000 2,000 1,000 food & restaurants 4,000 5,000 1,000 entertainment 6,000 6,000 0 miscellaneous 2,000 1, total 69,800 69,800 0 *including lingerie and children fashion

24 M a r k e t A n a l y s i s S a m p l e S t u d y Achievable Productivities and Risk Evaluation key retail sector maximum achievable productivity in /m² net origin of maximum turnover per risk class food & dailies 4,500 92% 6% 2% drugstore/perfumery 4,000 58% 28% 14% clothing (in total) 1,800 52% 31% 17% shoes & bags 1,900 54% 31% 15% sports 1,800 59% 27% 14% books & stationery 2,300 58% 29% 13% children goods (clothing excluded) 1,600 61% 26% 13% electronics 3,800 65% 23% 12% furniture & home appliance 1,300 55% 30% 15% services 4,300 61% 26% 13% food & restaurants 2,200 61% 26% 13% entertainment % 26% 13% miscellaneous 1,700 61% 26% 13% total 2,100 61% 26% 13% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% core turnover competitive turnover opportunistic turnover

25 M a r k e t A n a l y s i s S a m p l e S t u d y Total Risk Evaluation of the Shopping Center Origin of Total Turnover per Risk Class 13% maximum total turnover in M. net 61 26% 61% maximum total productivity in /m² net 2,100 maximum productivity in fashion in /m² net 1,800 core turnover competitive turnover opportunistic turnover

26 M a r k e t A n a l y s i s S a m p l e S t u d y Productivities Benchmarks total productivity in the key retail sectors in per m² (net values) calculated for projected center average for the city prime centers maximum 2,100* 2,100 2,400 2,800 3,500 productivity in the fashion sector in per m² (net values) calculated for projected center average for the city prime centers maximum 1,800* 1,900 2,200 2,700 3,300 *based on a clearly reduced size of the fashion GLA to about 28,000 m²

27 M a r k e t A n a l y s i s S a m p l e S t u d y Expectable Rental Income achievable rental level per sector on average, based on the shown level of productivity and suitable rent to sales ratios per sector (data in /m² and month, net) low range based on the turnover potential from core and competitive zones high range is based on the maximum turnover including opportunistic zones key retail sector average rent to sales ratio rent with core and competitive turnover rent with maximum total turnover food & dailies 4% drugstore/perfumery 9% clothing (in total) 14% shoes & bags 16% sports 12% books & stationery 8% children goods (clothing excluded) 13% electronics 6% furniture & home appliance 15% total services 11% food & restaurants 15% entertainment 14% 4 4 miscellaneous 12% total maximum total annual rent in M. net 17.2 maximum total monthly rent in M. net 1.43

28 M a r k e t A n a l y s i s S a m p l e S t u d y Summary and Conclusion

29 M a r k e t A n a l y s i s S a m p l e S t u d y Conclusions the projected Center is situated at a strategically strong location concerning accessibility, allowing for a good penetration in the northern parts of the city and its suburbs however, the location quite remote from the central parts of the city, will not allow for a reach over the whole city the Shopping Center will have regional importance for some city districts only! one of the main strength of the location is its very populous catchment area, from which about 40% of the needed turnover can be generated in a long term perspective the primary catchment area can get even stronger, if the nearby development areas are transformed into housing zones concerning the size of the area, some 8,000 to 12,000 additional inhabitants are likely to live in this area in the long run however, the development perspective to reach this figures needs to be assumed with at least 5 to 7 years from now! the main additional zones for the generation of turnover need to be: districts A and B in direct competition with competitor 1 district C in direct competition with competitor 2 the city center area via the metro link in direct competition with strongest competitors of the city

30 M a r k e t A n a l y s i s S a m p l e S t u d y Conclusions the analysed Shopping Center project will be able to generate a significant amount of turnover, which however is limited in contrast with the projected total size of the mall especially in the fashion sector, the intended amount of GLA exceeds the market size by far; a reduction to about 28,000 m² is highly recommended overall, the Center will be able to generate a maximum turnover of about 61 million in the year 2020, based on a quite opportunistic approach to the size of the catchment area and the market shares which can be achieved about 13% of this turnover is rated to be at risk, being only available with a truly unique concept and tenants the achievable productivities can reach some 2,100 per m² in total and some per m² in the fashion sector based on this productivity figures, a reasonable average rent is assessed at about 20 per m² in total the annual footfall is expected at a level of about 10 to 11 million visitors with an average ticket between 13 to 15

31 M a r k e t A n a l y s i s S a m p l e S t u d y Conclusions the analysed Center will find its place in the market, however with below average productivity figures and with several strategic risks to be considered if aiming on a sustainable performance for a longer period: the potential positive impacts by nearby development areas are available only in a longer term perspective; until then, the Center needs to run with low productivity figures for several years the potential uniqueness of tenants and their concepts will not be watched inactively by the main competitors any unique tenant will be unique only for a certain period of time the set market shares can only be achieved, if the concept of the mall is outstanding as against the competitors, making potential clients pass several other options for shopping in favour of the analysed project

32 A B O U T R E G I O P L A N RegioPlan Consulting 32 RegioPlan Consulting is a pan-european business consultancy with focus on retail related issues. We have over 30 years of practical and scientific experience, due to dealing with pan-european consumer behaviour, international retailers and retail real estate on a daily basis. We understand consumers and retail. For your strategies and stationary retail. We understand consumer behaviour as well as the international market developments and translate their implications into the stationary retail relating to the future. Our expertise as a retail consultancy is the development of retail concepts as well as the positioning and the refurbishment of retail properties. Stationary Retail Consumers Retail Megatrends

33 A B O U T R E G I O P L A N RegioPlan Consulting 33 We understand consumers and retail. For your strategies and stationary retail. C O N S U LT I N G pan-european business consultancy with focus on retail related issues. P U B L I C AT I O N S RegioPlan regularly publishes professional publications focusing on consumers, retail, and retail real estate. D ATA & R E S E A R C H In our work we draw upon secure and reliable data by our sister company RegioData Research. E V E N T S & A C A D E M Y Every year RegioPlan hosts two of the most important industry events in Europe: the European Shopping Center Symposium and the Retail Expertenforum, as well as several practical seminars and lectures.

34 A B O U T R E G I O P L A N Publications 34 Consumers Omni-Channeling Shopping Centers Retail Area How consumers will shape the retail space design of the future Uncovering Omni-Channeling: An in-depth study of the most relevant issues Retail Area in the Omni- Channel World of Tomorrow New Directions for Shopping Centers Retail takes place where the consumers are Interviews with top decision makers Consumers Formats - Strategies Transforming Consumers Retail Behavious Reactions from Retailers COPoS Analysis

35 Contact Persons HANIA BOMBA CEO T: E: h.bomba@regioplan.eu KLAUS HAVLICEK HEAD OF CONSULTING T: E: k.havlicek@regioplan.eu

36 Give Us A Shout! AUSTRIA: Theobaldgasse Vienna office@regioplan.eu GERMANY: Picassoplatz Münster n.eibl@regioplan.eu We understand consumers and retail. For your strategies and stationary retail.