BNP Paribas REIM to launch EUR 300m retail property fund

European fund manager BNP Paribas Real Estate Investment Management is working on a new retail property investment fund for institutional investors. The vehicle, which will have a volume of EUR 300 mln, will focus on retail box properties across Italy.

'We are in discussions with an industrial group on the transfer of a seed portfolio of retail boxes valued at EUR 300 mln. This means that the fund is already fully invested. In 2011 we hope to raise around EUR 140 mln of equity from investors and make use of 60% of leverage to buy the portfolio,' managing director for Italy Ivano Ilardo said in an interview with PropertyEU at EXPO REAL. The fund launch is in line with the group's strategy to focus on commercial assets.

The Italian asset management unit of BNP Paribas REIM manages EUR 3.5 bn of assets across 10 Italian funds, of which shopping centres represent roughly EUR 1 bn. Ilardo said the company is also working on the creation of a new fund of funds vehicle which should be operative from next year. The vehicle, dedicated to retail investors, will invest in a portfolio of 10 funds specialised in a particular product. ‘We are aiming at EUR 100 mln of fundraising,’ he said.

Ilardo also sees opportunities to grow in the asset management of state-owned properties as an increasing number of public authorities look into the real estate fund structure as a way to unlock value. Earlier this year, BNP Paribas REIM SGR was awarded the management of the Comune di Milano II fund as well as part of pension fund Enasarco’s real estate portfolio (around EUR 500 mln). 'We are in the process of completing due diligence on the Milan municipality assets. On completion, a EUR 120 mln portfolio will be transferred to the new fund,’ Ilardo said.

He expects that the public sector will represent an even larger part of the Italian real estate fund management industry in the future. 'The public sector has strongly contributed to the development of the real estate fund industry in Italy and this can only increase with the introduction of the Federalismo Demaniale - the plan to transfer state-owned assets to the local authorities,' he said.