January 10, 2019
As an independent player in real estate fund management, Mata Capital prioritizes the performance of its investment vehicles and pays close attention to detail for all its assets. An example is a commercial space leased to the Supermarchés Match brand in Beauvais. A location with strong potential, for which Mata Capital deployed a tailor-made strategy, ensuring the sustainability of rental income.
The context: Match Beauvais and its ideal location
In Beauvais, at 98 rue Abbé Pierre, the Supermarchés Match brand has established one of its food supermarkets. This store perfectly illustrates the group's strategy: stores that focus on service, professionalism, and proximity.
At this location, Match offers a store that is more quickly accessible than the large commercial areas located on the outskirts. "The total area is smaller than that of competing hypermarkets, which implies a less extensive product range. However, you can find everything you need there, including an excellent selection of fresh products, which are Match's reputation," explains Xavier COLLET, Asset Management Director at Mata Capital.
The objectives: supporting Supermarché Match in developing its commercial performance
The Match group comprises 116 food supermarkets. Its annual turnover is approximately 1.4 billion euros. With the Beauvais store, the group's objective is to bring all of Match's expertise to a store located in the heart of a neighborhood set to undergo transformation. Indeed, the real estate asset is at the heart of an eco-district under development, which will eventually host numerous housing units that will form a strong primary catchment area.
The only downside is that the emergence of this eco-district is taking longer than expected.
Already established, Match was unable to benefit from the anticipated dynamism. However, the rent is very real, despite commercial performance being lower than forecasts. "This is where we come in," explains Xavier COLLET. "The occupancy cost was too high for Match, and the brand would have left Beauvais in 3 years at the end of its lease. We decided with Match to reduce the rent in exchange for a commitment to sign a new 9-year fixed-term lease. This strategy was planned at the time of the real estate asset acquisition and factored into the property valuation. We knew we would capture excess rent during the first years of the lease and had planned to lower the rent while trying to secure a longer, firm commitment from the brand."
The brand will benefit from a reduced rent that will be more consistent with the current situation. "The rent was in line with the area's potential and development, but things are moving slower. The new agreement includes a guaranteed fixed rent, but also a supplementary rent that will be triggered beyond a certain turnover. We believe this will be the case in a few years once the housing units are completed."
The savings from the rent reduction will allow Match to increase its marketing efforts to better promote the location and retain its customers. A poster campaign to indicate the address is planned, and this communication effort benefits everyone. Better signposted and known by the public, the supermarket will increase its commercial performance, and the location will become more visible and attractive.
With this agreement, Mata Capital maintains the asset's value by offsetting the rent reduction with a significant decrease in the capitalization rate linked to the signing of the new lease with a firm term of 9 years. By then, the neighborhood will be completed, and the catchment area will be sustained.
This foresight and close relationship with brands is Mata Capital's hallmark. The approach is case-by-case, tailored to each project. The time and effort invested vary greatly from one property to another, with the Beauvais example being just one of many. "We have a range of actions we can trigger to create value and attract new tenants or retain existing ones. Sometimes it's necessary to modernize an asset, or divide spaces when the area is too large for a single tenant. We also utilize land reserves to develop space when possible and expand premises." Mata Capital calls on external partners when necessary. From consulting firms to architectural practices, professional expertise is often sought to ensure all assets evolve in the best way, particularly by complying with all regulatory frameworks.
Conclusion
"Match in Beauvais is an example of our approach and the vision we develop. We always make an effort to understand – before purchasing a property – the typology of an asset, local expectations, and future developments. I traveled to Beauvais to meet with elected officials, professionals, and to understand. To understand the road network, urban planning projects, the development of the primary catchment area. To understand the medium and long-term challenges."
Mata Capital