GERMANY - Mainly German institutional investors have ploughed €85m into a retail fund launched by Henderson Global Investors to invest in supermarket-anchored retail in secondary locations - despite continued investor resistance to 'blind pool' vehicles. 

The target €300m fund will aim for a 7% total return, 6% of it from income.

Tim Horrocks, head of Henderson German property operations, said raising capital for the Spezialfond had been "hard work" over the best part of 12 months.

"There's less capital about," he said. "Investors like smaller ticket sizes, and they're taking longer to do their due diligence. They're also afraid a new blind pool won't get off the ground. That's because a lot of people are pushing new ideas and many of them don't."

The Henderson German Retail Income fund (HGRIF) will focus on retail parks in catchment areas with populations of around 50,000, where pricing has remained relatively stable.

The assets will be new or recently refurbished, anchored by well-known supermarket chains, and on long leases.

The idea is to hold the assets for 5-6 years and then sell them on with a significant period of the lease passing to the buyer.

The exit strategy is significant in retail market that has only relatively recently become a target for institutional investors.

"In my view," said Horrocks, "assuming that it becomes an acceptable asset class, we'll have a ready-made exit when the time comes."

The fund has acquired all its pipeline assets to date from developers, retailers and agencies.

Asked about aggressive pricing of assets in a burgeoning market, Horrocks said: "Pricing is keener, and pricing for prime assets in bigger centres have hardened."

But he added that there were sufficient assets available to fill the pipeline.

"Debt rates have fluctuated over the past 12 months, and that's an advantage in our direction following recent wobbles," he said. "There's a lot of focus on the sector, but it's not too crowded."

Topics