Savills Investment Management has launched Europe V – Retail Fund to target shopping centres, retail parks and other retail assets across Europe.
Savills IM, which also announced the first closing of the fund, said the fund has already made its first deals, purchasing two assets in The Netherlands from pan-European retail real estate investment manager Redevco for €31m.
These assets comprise two retail premises located in Breda and Almere, let to C & A, ESPRIT and JD Sports.
The fund is expected to deploy all initial capital imminently, with a further capital raise scheduled for the second quarter of 2018, the real estate investment manager said.
Europe V is targeting a total net return of 10% to 12% net per annum.
Europe V marks Savills IM’s second recent European retail-focused fund, following the launch of Nordic III – Retail in late 2017.
Nordic III acquired four retail parks from IKEA Centres for €125m following a successful first close and will invest in high street properties, locally-dominant retail centres, warehouses and retail parks across Sweden, Denmark, Norway and Finland.
It is also expecting a second close in the second quarter of 2018, Savills IM said.
Europe V is a value-add fund whilst Nordic III is a core and core plus fund.
Neil Varnham, the fund manager of Europe V, said: “We anticipate that the next 12 to 18 months will present some highly attractive buying opportunities in western European retail.”
Varnham said many European economies have followed Germany and moved into a recovery phase with rising consumer confidence generating growing levels of sales which feed through to demand and rental growth.
“To secure good returns it is essential to consider the key factors driving a locations success and failure. We will leverage our 13 office European platform, local market knowledge and extensive retail experience to source and add value to assets.”
Kiran Patel, Savills IM’s chief investment officer, said: “Investors must be cognizant of the risk factors facing retail but also aware that the sector currently presents opportunities for managers able to identify the right assets.
“We have identified six types of retail we believe to be resilient or primed to take advantage of changing trends including outlets/malls and retail stores or parks which combine retail with leisure and entertainment to provide consumers with an ‘experience’.”