Nordic Real Estate Partners (NREP) has secured a first close of €121 million for its second regional retail fund. Through the value-added vehicle, NREP Nordic Retail Fund II, the firm plans to acquire “well-located, food-anchored retail assets in strong, growing Nordic cities with an attractive demographic outlook.”
NREP expects the fund to have its second and final closing of €200 million to €250 million towards the end of the year. With 50 percent leverage, the fund will have total buying power of up to €500 million. Although this is the firm’s second retail investment vehicle, Fund II is NREP’s sixth fund overall.
Rasmus Nørgaard, chief investment officer of NREP, said in a statement: “Food-driven retail consumption in the Nordics is stable, which is why the risk-reward balance is favourable in our view.”
The first closing consists of a group of nine northern European institutional investors, among them the pension fund for Danish lawyers and economists JØP, the pension fund of early childhood teachers PBU and the German insurance group Talanx Group. In addition, NREP has co-invested in the fund, as it has done with all of its prior commingled vehicles.
Through the fund, NREP is targeting an IRR of 12 percent to 13 percent and expects to deliver annual dividends of 7 percent to 10 percent. NREP plans to provide “active, hands-on asset management” with many of the properties acquired on behalf of Fund II.
Nørgaard added: “We historically have been able to further enhance the risk-reward balance by working with our tenants to improve turnover and tenant mix, as well as the general property specifications. This has been possible as there are few focused owners in this segment in the Nordics.”