Global property investment manager Cordea Savills has held a first closing for its European Retail Fund. Through the closing, the London-based firm raised €70 million in equity, with commitments coming from four undisclosed German institutional investors.
With 50 percent leverage, the commingled fund now has the buying power to purchase up to €140 million of assets. Through the vehicle, Cordea Savills initially will focus on acquiring shopping centres, retail parks and high street retail units in Germany, the UK, France and the Nordics.
Thomas Guetle, the fund’s director, said in a statement: “The retail sector has outperformed offices in each of the target markets over the 10 years to the end of 2011. We anticipate retail will continue to outperform as a sector over the next five years in the majority of Western European economies.”
The fund, which is seeking more than €500 million in total commitments, is targeting an internal rate of return of 7 percent per annum, with an average distribution of 5 percent per annum after fees and local taxes, over a 10-year term. It is structured as a Luxembourg-domiciled Fonds Commun de Placement and is targeted at German institutional investors.
Guetle added that “German investors, especially, are traditionally underweight in retail property, but surveys indicate their allocations are rising. This fund will meet their appetite for this sector.”