Annual Results and Market Resilience
ZDR Investments, a Czech real estate investment group focusing on European daily needs-based retail parks, proudly announces the annual results of its Master fund, ZDR Investments SICAV for the financial year 2023. The fund achieved an annual return of 8.75%. This stable result confirms the resilience of the convenience real estate sector even in today's difficult and turbulent economic environment.
The Master fund's portfolio included 38 properties valued at over €408 million by the end of 2023. The portfolio's weighted average lease expiry (WALE) was 6.4 years on the same date. As of Dec 31, 2023, ZDR’s retail portfolio continued to maintain a high committed occupancy rate of 99.8 %, healthy gearing ratio at the level 51.6% with rent reversion of 6.2%, that proves strong portfolio fundamentals.
Given ZDR Investments' strong market presence, we successfully closed three additional acquisitions despite the slowdown in investment activity. The most significant of these was a newly built, food-anchored retail park in Rijeka, Croatia, valued at over EUR 40 million, which has become our second-largest asset.
Strategic Growth and Investment Outlook
Ondřej Sychrovský, Member of the Board of Directors of ZDR Investments SG VCC says: "Over its six-year history, the Master Fund has regularly delivered stable results. This was also the case in the past year, which presented a challenge for many investment segments. I’m more than thrilled we delivered to our shareholders the total return of 62.9% over a six-year presence. With strategic property selection, a creditworthy tenant mix and a focus on the grocery- and discount-anchored sector, the properties provide sustainable income and resiliency despite unfavorable economic conditions.”
The commercial real estate sector has been under intense pressure globally, particularly in the US, as interest rates have risen to quell high inflation. The offices valuation tumbled sharply, and owners of these properties are contending with structural challenges and headwinds. Western Europe and Asia office markets, however, are experiencing the same. Nevertheless, not all markets have been hit equally. European daily needs-based retail parks saw a much lower prime yield upward shift compared to other commercial real estate segments. With strong fundamentals and ability to increase rent, retail parks have repeatedly proven to be a resilient value proposition and have performed better than high streets and shopping centres both during and after lockdowns. We firmly believe that retail parks will remain in the spotlight in the coming years and get even more tailwinds since the monetary cycle is going to be over soon.
The Master Fund has a highly diversified portfolio in growth markets in 5 European countries. The anchor tenants are multinational grocery chains, discounters and other essential retailers. Thanks to the two-level structure (master-feeder fund), Asian investors can also benefit from a proven European investment concept aligned with their local investment environment. Through the ZDR Investments SG VCC feeder fund, they can participate in a portfolio of high yielding commercial real estate from the European region.
The ZDR Investments SG VCC Fund has a clear ownership structure and is managed by the experienced Euro Asia Asset Management team. Other reputable companies collaborate and oversee the fund structure. The fund administrator is the well-established LSE listed company JTC Group and the depositary is OCBC Bank Singapore, the longest-established Singaporean bank.
