Hermes, Redevco team up to target European retail

Hermes, the investment manager owned by the BT Pension Scheme, has joined Redevco in a European core-plus/value-add retail joint venture.

The companies announced the plan to invest €250m ($281.5m) in France, Germany and the Benelux at this year’s Expo Real conference in Munich.

Redevco will manage the assets, which will typically be in the €10m-60m price range and bought over the next two years.

The joint venture, which could also invest in the Nordic region, expects to deliver a 7-8% return.

Redevco chief executive Andrew Vaughan said that – in line with Redevco’s current investment approach – the venture will target shopping centres, retail parks and high street retail, with deals done on a case-by-case basis.

Redevco, which pulled back from Italy and Poland in 2011 by selling assets, recently teamed up with Ares Management to invest €500m in Spain and Portugal’s retail sectors.

For Hermes, the partnership is a step towards increasing Continental European investments, according to chief executive Chris Taylor.

Taylor hopes Hermes can over time achieve a 70/30 split between UK and Continental European real estate.

At present, around 15% of the company’s real estate investments are in the latter.

Teaming up with more European partners is an option for Hermes, Taylor said, following on from its partnerships in the US.

Last year, Hermes and privately-owned Lionstone Investments agreed a $250m US office sector joint venture.

In European retail, the opportunity for asset management strategies is vast, Taylor said, with few players in the market.

The themes of demographic change and urbanisation, he added, are offering an interesting opportunity to further invest in the retail sector.

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