API shops for €1bn

Aberdeen Property Investors has launched a €1billion ($1.3 billion) European shopping fund for international institutional investors.

Aberdeen European Shopping Property Fund is structured as a 10-year closed ended fund, and sealed its first deal in September.

The fund launch comes weeks after API suggested in a release that returns from European property would fall next year from 11 percent in 2006 because of a slowdown in the growth of property values. However, the report also pointed out the retail sector was performing well, with rental growth prospects generally more positive than offices.

Nico Tates, fund manager, admitted there was “tough competition to complete good deals in real estate investments in all sectors in Europe,” but argued that Aberdeen could still generate premium fund returns for investors.

API has set a target return on equity of 9 percent a year net of fees and after debt. It said the fund would invest in unit shops, shopping centres and retail warehouses across Continental Europe but the initial focus will be on the North West of Europe including Belgium, France, the Netherlands and Germany. It will also scout out opportunities in Nordic countries.

The fund currently owns a portfolio of 150 units shops in inner city locations across the Netherlands valued at €124 million but it hopes to have €1 billion invested by the end of 2009.

Subscription of shares will be held open until that time, although the first close is expected to take place at the start of 2007. Debt funding is being capped at 65 percent of gross asset value of properties acquired, according to a statement.

Aberdeen held a first close of an Asia-focussed fund in October.