Cordea Savills holds first close of its European Retail Fund

Cordea Savills, the international property investment manager, has announced the first closing of its EUR 500 mln plus European Retail Fund.

The closing raised EUR 70 mln of equity from four German institutional investors, and with gearing, the fund now has capital to acquire up to around EUR 140 mln of assets. The vehicle will initially focus on Germany, the UK, France and the Nordics to construct a diversified portfolio of shopping centres, retail parks and high street retail units.

The fund is targeting an internal rate of return of 7% per annum with an average distribution of 5% per annum after fees and local taxes over a 10-year term. It is structured as a Luxembourg-domiciled Fonds Commun de Placement (FCP) and is targeted at German institutional investors. The fund's target size is EUR 500 mln plus a gearing ratio of 50%.

Thomas Guetle, fund director, commented: 'The retail sector has outperformed offices in each of the target markets over the 10 years to the end of 2011. We anticipate retail will outperform as a sector over the next five years in the majority of Western European economies.'

Ian Jones, portfolio manager, said the fund has the advantage of investing across the retail spectrum. 'In this way, we can achieve more attractive risk-adjusted returns by combining higher yielding segments, such as Swedish retail warehousing, with traditional high street retail, for example in major German cities. An additional benefit is the ability to access a greater range of investment opportunities leading to the potential to achieve higher returns.'