F&C REIT eyes EUR 500m German acquisition spree

European investment manager F&C REIT is planning to invest some EUR 500 mln in German core and core plus real estate on the back of strong client demand for this type of product, Zvi Noé, director of investments, told PropertyEU in an interview.

'We hope to spend EUR 500 mln on behalf of three German Spezialfonds targeting core/core plus products. Additionally, we will look for opportunities in the value-added and opportunistic segments,' Noé said.

F&C REIT, with a £7.6 bn portfolio worldwide, owns £1 bn worth of assets in Germany but has been actively expanding its presence in the past months. Last year the company launched Best Value Germany I, its first fund for German institutional investors that is structured as a KAG fund management structure with a total investment volume of EUR 300 mln. The fund is targeting retail properties in secondary cities in Germany. In late 2010 F&C REIT also launched a new spezialfonds on behalf of a German pension fund. The vehicle will follow a core-plus strategy with a targeted capital expenditure of EUR 120 mln.

Angus Henderson, head of F&C REIT's business development, said the company will be focused on income-producing assets which are very popular among investors. 'We are looking for high-street assets at prime locations in secondary cities which provide higher returns compared to investments in the Big 7 cities (Munich, Frankfurt am Main, Hamburg, Stuttgart, Düsseldorf, Berlin and Cologne),' he said.

F&C REIT is also actively looking for new acquisitions in the UK, with a focus on value-added and opportunistic investments. According to Henderson, the company will target assets in regional centres in a bid to take advantage of a rising yield spread between prime and secondary locations.

'Prime office schemes and shopping centres in regional centres are traded at a very attractive rate,' he said. 'Although it is important to be very selective, we are well placed to analyse the risk in the office market outside of London.' The company will be looking at partially-vacant assets in good locations in view of future repositioning through active asset management.