Frey, a French real estate investment firm focused on open-air retail, has acquired Europe's fourth-largest outlet manager.
The purchase of Retail Outlet Shopping, or ROS, marks a new foray for Frey, a publicly listed company that has chosen to be a so-called benefit corporation that pursues positive social and environmental changes in addition to profit.
"This is a structuring and strategic acquisition for the Frey Group", said CEO Antoine Frey.
ROS operates 12 outlet centers operated on behalf of third parties in eight countries for a total of 215,000 square meters.
"This acquisition gives us access to a new, high-performance asset class, rare in Europe with 210 centers listed on the continent, which requires specific know-how in marketing, leasing and site management", Frey said.
The acquisition of ROS also enables Frey to broaden its geographical exposure in Europe. Post-acquisition, the real estate company would operate a portfolio of 31 retail sites in nine European countries, valued at over €3 billion.
"Our ambition is to double the size of the portfolio managed by ROS over the next five years, which is currently valued at around €1 billion. We will proceed by acquiring existing assets and launching new greenfield operations or transforming commercial assets into outlets," Frey's CEO said.
The deal with ROS is accompanied by the signature of a first outlet project in Malmö, Sweden. This 26,000 square meter complex will house 135 brands, and the first 18,000 square meter phase is scheduled for completion in the second half of 2026. This first phase represents an investment of €100 million, for a yield on cost of over 8%.
The acquisition of ROS — the price was not disclosed — will be "accretive from 2024", Frey said. "Paradoxically, in Europe there is a higher risk premium for outlets of around 100 basis points on the return on capital. This enables us to post a higher return than our existing assets, which stand at 6.5%, and to benefit from the potential for value creation, as I am convinced that capitalization rates will converge in the coming years, as is already the case in the USA," he said.
ROS's Austrian founders — Gerhard Graf and Thomas Reichenauer, two McArthurGlen alumni who created ROS in 2011 — plan to remain at the helm of the company for two years. This will give them time to pass on their expertise to the Frey Group's 210-strong workforce.
The operational integration of ROS into the Frey platform is scheduled to be completed in the second half of the year, the group said in a statement.