Interview with Dietmar Reindl: IMMOFINANZ Ventures into Italy

According to COO Dietmar Reindl, the fact that efficient and high-quality retail parks have not been developed in Italy is the reason behind the company's entry into the Italian market via its Stop Shop brand.

Interview with Dietmar Reindl, COO IMMOFINANZ first published in ACROSS 2021

ACROSS: IMMOFINANZ has recently announced its intention to establish itself in the retail segment in Italy. What exactly do you plan to do?

DIETMAR REINDL: We entered the Italian market earlier this summer through the acquisition of a fully leased and newly built retail park in the northern Italian city of San Fiore. As a result of the addition of Stop Shop San Fiore, we are now present in ten European countries under our successful retail park brand. That brings our total number of locations to approximately 110. Over the past few years, we have achieved strong and profitable growth and have clearly positioned ourselves as the leading retail park operator in Europe. The next target that we are aiming for is 140 locations.

ACROSS: The majority of the STOP SHOP properties are currently located in Eastern and Southeastern Europe. What makes Italy attractive now?

REINDL: We have been looking into the Italian market for roughly two years now and have analyzed it very closely. Italy is an ideal match for us and serves as yet another future growth driver for our European retail platform. In Italy, the traditional retail park, which we associate with high quality and efficiency, still has not been firmly established. In the whole of Italy, with its population of approximately 60 million, there are currently only around 230 retail parks, covering an area of 3.2 million square meters. A large proportion of those locations are "big box" agglomerations that are lacking in structural management.

For the sake of comparison: In Austria, which has a population of nine million, some 300 retail parks cover a total area of 5.8 million square meters. In addition, retail parks in Italy vary greatly in terms of size and catchment area. Moreover, many were originally built by local developers that were primarily focused on making the development process as simple and fast as possible, rather than on the requirements and preferences of retailers and their customers. There is also a lack of a "retail park" identity, and that is precisely what we have created with our highly standardized, Europe-wide STOP SHOP brand.

ACROSS: So, Italy is somewhat of a latecomer to the Europe wide trend toward retail parks?

REINDL: One can certainly see it that way. That, in particular, is where a great deal of potential is to be found. Retail parks that have the characteristics of a neighborhood centers, excellent transport links, and a varied tenant mix have become increasingly important in Italy as well. This can also be seen in the demand from our international tenants – and the crisis-resistant nature exhibited by this format throughout the pandemic has reinforced the issue. As is the case in other markets, discounters as well as other retailers are increasingly moving toward retail parks. Service and entertainment offerings are becoming more and more important, and footfall and average time spent are on the rise.

ACROSS: Do you see potential for further growth in Italy primarily in the form of project developments or acquisitions of existing properties? How many locations do you intend to have in Italy in the medium term?

REINDL: I anticipate a combination of both. The necessary preparations are already underway, and we are concentrating on northern Italy, which has greater purchasing power. Over the course of the next three to five years, roughly 10 to 15 Stop Shop locations in Italy would be ideal for both us and our tenants.

ACROSS: Could you give us a brief overview of the latest acquisition in San Fiore?

REINDL: The retail park has a leasable area of approximately 27,000 sq m and is fully leased. It is located 37 kilometers north of Treviso and 60 kilometers north of Venice, in the middle of the Veneto region. Just under 100,000 people live in the catchment area – within a 30-minute drive. The Veneto region is one of the strongest in Italy in terms of economy and income, boasting a purchasing power well above the average of the country as well as that of the EU as a whole. The property, which has approximately 1,500 parking spaces, is conveniently located on the Italian SS 13 Pontebbana state highway, which runs from Venice via Udine to Austria. The retail park was completed in two phases in 2017 and 2019 and offers a very attractive tenant mix, which includes international retailers, such as C&A, Takko, MediaWorld, Decathlon, Roadhouse Grill, and Burger King, as well as a number of well-known Italian brands.

There is one thing that I am particularly pleased about: The Retail Park has also been equipped with a sustainability highlight. A photovoltaic system that feeds sustainably generated electricity into the public grid has been installed. That fits in perfectly with our sustainability strategy as we began installing photovoltaics systems at our Stop Shops as early as 2019. Such installations are currently being carried out at as many of our Austrian retail parks as possible.

ACROSS: The keyword is sustainability: What significance does it  have in your portfolio strategy?

REINDL: As a portfolio holder, our business model is long-term oriented and, as such, sustainability

is a significant part of IMMOFINANZ’s DNA. We have intensively addressed sustainable trends in our portfolio strategy for years. Our flexible premium office brand myhive is a very good example of how we also anticipate trends. More flexibility, community and networking, and more sustainable equipment, for example, via the use of standardized fit-outs – that is what is in demand. In the past fiscal year, the proportion of our properties with sustainability certificates has increased once again, and the certification

process for our retail parks has begun. The Stop Shop in the Serbian town of Lazarevac has been awarded a BREEAM In-Use sustainability certificate, and others are due to follow. In addition to installing photovoltaics systems, we also intend to forge ahead with the expansion of mobility services available at our sites. In the previous year, for example, all Stop Shop locations in Hungary were equipped with electric car charging stations, and the roll-out at our retail parks in the Czech Republic began in December.

We have also begun to utilize service water recovery systems at our retail properties as well as on a pilot project for Urban Forest, which aims to create small urban forests. At our Vivo! shopping centers, numerous other measures are also being implemented with the involvement of the respective communities, for example, the “Clean up Lublin” initiative at Vivo! Lublin.

ACROSS: The Coronavirus crisis seems to be, for the most part, behind us. What are the most important retail related lessons that you have learned?

REINDL: During times of crisis, capital strength, liquidity, and proximity to the customer are particularly important. As all of those factors were in place for us, we were able to react in a swift and flexible manner. And, our strategy of focusing on cost-effective retail formats that have the characteristics of neighborhood centers has proven successful. In recent years, we have prioritized building our retail properties in mediumsized cities in Central and Eastern Europe, socalled second and third cities, in which free market capacities exist and there is no dependence on tourism. Of course, we have also benefited greatly from the fact that we have always focused on maintaining close partnerships with our tenants. For some retailers, we are their biggest landlord in terms of the number of contracts. We were able to quickly find solutions with them, and we have now jointly kicked things back into gear with respect to further expansion.

ACROSS: Apart from Italy, in which countries are you planning further growth for STOP SHOP – to reach previously mentioned 140 or so locations?

REINDL: We are currently working on further acquisitions as well as our own developments in several countries, such as Poland. We are also interested in the Adriatic region, including Croatia, where we have secured land for retail parks.

ACROSS: Just one more brief look ahead: What trends do you see on the horizon with respect to the retail park sector?

REINDL: Retail parks that have the characteristics of neighborhood centers, very good transport links, and a varied tenant mix are the clear winners at present and will be in even greater demand from tenants and customers in the future. Nevertheless, we live in a rapidly changing world in which digital channels play an increasingly important role. As a result, we have launched a pilot project to establish a channel for digital customer communication. The new app, “Stop Shop Wallet”, enables customers to access special promotions offered by their favorite brands via their mobile phones. Of course, the app also benefits our tenants as it serves as a digital sales and marketing tool. Today’s consumers are online, and we need to meet them where they are.