Cordea Savills announces first close of its European Retail Fund
International property investment manager Cordea Savills has announced the first close of its €500m plus European Retail Fund.
It raised €70m of equity from four German institutional investors and with gearing the Fund now has capital to acquire up to c.€140m of assets. The fund will initially focus on markets in Germany, the UK, France and the Nordics to construct a diversified portfolio of shopping centres, retail parks and high street retail units.
Thomas Guetle, Fund Director, said the retail sector has outperformed offices in each of the of the target markets over the 10 years to the end of 2011. “We anticipate retail will outperform as a sector over the next five years in the majority of Western European economies. German investors, especially, are traditionally underweight in retail property but surveys indicate their allocations are rising so this Fund will meet their appetite for this sector.”
Ian Jones, Portfolio Manager added, “Income is a major driver of returns in the current environment and the level of income is higher in retail than the office sector measured on a pan-European basis.”
“We also see the advantage of investing across the retail spectrum. In this way, we can achieve more attractive risk-adjusted returns by combining higher yielding segments, such as Swedish retail warehousing, with traditional high street retail, for example in major German cities. An additional benefit is the ability to access a greater range of investment opportunities leading to the potential to achieve higher returns.”
The Fund is targeting an internal rate of return of 7% per annum with an average distribution of 5% per annum after fees and local taxes over a 10-year term. It is structured as a Luxembourg-domiciled Fonds Commun de Placement (FCP) and is targeted at German institutional investors. The Fund’s target size is EUR 500m plus with a gearing ratio of 50%.
Cordea Savills has offices in London, Milan, Munich, Düsseldorf, Stuttgart , Hamburg, Stockholm, Luxembourg, Paris, Singapore and Sydney. As at 31 March 2012, Cordea Savills and other Savills Group companies managed a total of €7.45bn.
Cordea Savills is the brand name for entities in the Cordea Savills group, including Cordea Savills LLP, Cordea Savills Investment Management Limited, Cordea Savills Fund Managers (Luxembourg) S.à r.l., Cordea Savills Fund Managers (Jersey) Limited, Cordea Savills Advisors Srl, Cordea Savills SGR SpA ,Cordea Savills GmbH and Cordea Savills SAS