F&C REIT Asset Management is seeking to invest in UK regional real estate on behalf of German institutions.
Best Value UK I, structured as a German Spezialfonds, would invest in commercial properties outside London for large German institutions.
F&C said institutions would need to make a minimum commitment of €5m for the fund, which has a target volume of €180m (including €100m of equity) and will use Hansainvest’s administrative platform.
F&C plans to invest in cities including Birmingham, Glasgow, Edinburgh and Manchester. A total of 10 to 15 office, retail and logistics properties would be bought for the fund, with medium-sized cities to the south west of London also a possibility.
Iris Schöberl, managing director of F&C REIT Germany, said: “Regional locations in the UK have a higher stability and offer higher yields compared to London.”
Schöberl’s UK colleague, Guy Glover, added that markets outside London are “at least 30% below the record prices in 2007”, offering room for an improvement in value from future rent increases and expected yield compression.
The fund is targeting an annual average distribution yield of 5.75% over 10 years.
Last week, F&C REIT bought two retail parks in Germany for a commercial property portfolio it manages for an unnamed institutional investor. The properties in Wittingen near Wolfsburg, and Karben, near Frankfurt, were bought for €18m.
The company continues to buy real estate for its Best Value Germany II Spezialfonds, focusing on large and medium-sized German cities.
Schöberl added that the company has sufficient capital to “realise transactions quickly” and aims to surpass last year’s transaction volume of €330m in Germany.