Foreign capital fuels German shopping centre management shake-up

Sonae Sierra has vaulted from a peripheral German player to a major force overnight, acquiring Unibail-Rodamco-Westfield’s third-party management arm in a deal that reshapes the shopping centre landscape. The Portuguese group now manages 19 German centres, including Alexa Berlin, Munich’s Pasing Arcaden, and the Gropius Passagen network.

The transaction hands Sonae Sierra 12 management mandates covering 680,000 sqm of retail space, expanding its European portfolio to more than 60 centres with 600 specialists. For URW, the sale marks a strategic retreat from third-party mandates to focus solely on its owned flagships—Westfield Hamburg-Überseequartier, Westfield Centro Oberhausen, and Westfield Ruhr Park. “This strategic move allows us to focus entirely on our core business around our own locations in Germany,” says Jakub Skwarlo, COO Central Europe for URW.

For Sonae Sierra, it represents a strategy reversal: the company had sold German assets during the retail downturn. Now, as foreign capital rediscovers shopping centres after steep price corrections, it is doubling down. “There are many losers and few winners. The wheat has been separated from the chaff, with North Americans in particular rediscovering German shopping centres,” observes Josip Kardun, Managing Partner at Dunman Capital.

The acquired portfolio spans both strong and problematic assets. Alexa Berlin anchors the high end, while the Arcaden chain ranges from Munich’s Pasing Arcaden to secondary markets such as Gera. The Gropius Passagen, managed by Sonae Sierra, was recently linked to a reported €240m acquisition by London-based Hayfin Capital.

Demand picks up as international capital returns

Yields point to a selective recovery. Prime net yields sit at 5.6% according to BNP Paribas Real Estate, with prime city-centre assets yielding around 5.9%. Consultant Jörg Krechky of Rreit Retail Investment Management sees compression “towards 5% to 5.25%” for the best properties. “Interest rates are improving, demand is picking up again and international capital is returning,” he says. URW’s financial pressures, notably Hamburg Überseequartier, created the opening for Sierra’s contrarian push.

“This acquisition reflects our strong confidence in the long-term potential of the German market,” notes Cristina Moreira dos Santos, Executive Director at Sonae Sierra. Christine Hager will lead the enlarged German operation, tasked with integrating a mixed portfolio as rents and occupancies tentatively improve.

The competitive implications are clear. ECE Group’s dominance now faces a scaled rival. Sonae Sierra’s European platform, honed through downturns, offers institutional investors an alternative operator. “Centres are now cheap enough to get into,” says Anke Haverkamp, shopping centre specialist at JLL.

URW’s withdrawal reflects capital allocation rather than pessimism, with resources concentrated on its flagships. Yet recovery remains uneven: while investors accept 5.5% yields at top locations, ageing centres still trade at 6–9 times annual rent, with opportunistic buyers seeking 7–8% gross returns.

Sonae Sierra’s gamble looks well-timed rather than reckless. By leveraging cross-market tenant networks and operational efficiencies, the group is betting that German shopping centres are, once again, investable. Success will hinge on stabilising occupancies and delivering efficiencies across a portfolio spanning both Alexa and Gera.