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Savills IM launches second German retail vehicle

The London-based firm announces its second German core and core-plus retail fund for institutional investors which will have a €500m target and planned annual distribution yield of 4 percent.

Savills Investment Management, the real estate investment management arm of London-based property firm Savills, has launched German Retail Fund II – High Street Plus which will focus on retail assets in prime urban locations throughout the country.

The firm said it will generally employ core and core-plus strategies on behalf of the fund, but would also consider value-add assets if the opportunity arises. Approximately 30 percent of the equity will be deployed in major cities with 70 percent going into economically strong, mid-sized towns.

An agreement for the first investment, a commercial building in what it called a prime location of Regensburg, in the south-east of the country, has already been rubberstamped. According to Savills IM’s research, Regensburg is one of the most desirable locations in Germany. The price of the asset was not disclosed.

A spokesman for Savills IM said the firm believed that prime, urban retail assets in mid-sized towns and cities are “highly attractive and stable in value”, and although investors have traditionally focused on larger cities, the spread of industry in Germany means this category offers significant investment potential.

Christian Härtl, the fund’s manager, said: “Prime locations in economically strong medium-sized cities offer the same long-term stability for retail investments as major cities. It therefore makes sense to broaden the investment horizon and capitalize on the opportunities available in mid-sized cities.”

Thomas Gütle, managing director of Savills IM Germany, said: “While there is a lot of competition in the German retail sector, Germany remains the number one target for international chains looking to expand their business in Europe.”

“Following the success of German Retail Fund I and the sale of the entire portfolio of 25 well-let and well-positioned retail properties, the services and expertise of Christian Härtl and the entire team are now focused on German Retail Fund II. The team can use its experience in value-added investing to further enhance the fund’s performance,” he added.

In April this year, Savills IM sold a 1.96 million square foot portfolio of retail assets from its German Retail Fund I for €320 million from Patrizia Immobilien. The vehicle, which opened in 2007, raised €190 million and was closed down after the sale.

BBE Handelsberatung, a research specialist focused on the German retail sector, assisted Savills IM with strategy development.

As of December 31, 2015, Savills IM had €17 billion of assets under management.