KanAm Grund has launched a real estate fund to invest in southern Germany and hopes to raise €500m from institutional investors.

The German fund manager said it had already bought an in asset Frankfurt am Main for the fund and was in the process of acquiring another property in Stuttgart.

KanAm did not disclose how much capital had been raised, but the two transactions are understood to require close to €100m of equity.

The first acquisition was a 99%-leased shopping centre in Frankfurt’s Höchst district on the site that used to host a Hertie department store, with a ground area of 9,000sqm.

The Fokus Süddeutschland fund will look to generate annual returns of 4% to 5% by concentrating on Germany’s strongest economic regions in the Munich-Stuttgart-Frankfurt triangle.

KanAm Grund said its fund management team conducts a qualitative and quantitative analysis in order to pick suitable properties in its target region.

It has 16 defined target markets which it continually examines on the basis of 39 indicators. It can invest in office, retail, hotel and residential sectors.

The KanAm Grund Group was reorganised last year in a bid to broaden its appeal to clients outside Germany and those requiring a wider range of investment vehicles.

Last year, the company restructured itself into three divisions: an open-ended fund, a special institutional fund, and an arm for international investment and asset management advice.