Fidelity invests €80m in European real esate deals

Fidelity Worldwide Investment's real estate team has completed five acquisitions across Europe totalling almost €80 mln for the investor's Eurozone Fund. The prices for the individual assets reflect relatively high initial yields.

The series of individual real estate transactions were carried out with a variety of domestic and international vendors in the latter part of 2012 and early 2013.

In Berlin, Fidelity acquired an office and retail building on retail boulevard Kurfürstendamm for a yield just over 5%. Also in Germany, Fidelity acquired a logistics property in Stuttgart at a 7.1% yield and a warehouse in Munich at a yield of 8.1%.

Fidelity said there was significant potential to reposition the retail asset in Berlin over the coming years. ´The acquisition yield at just over 5% reflects the under-rented nature of the property,' Fidelity said.

Fidelity also acquired an office building let to US corporation Lexmark in the western suburbs of Greater Paris. Fidelity said it was able to negotiate an attractive price and secure a high yield of 7.5% for the well-let asset.

The fifth transaction involved a new office building developed and sold by Dutch green office developer OVG in Hoofddorp near Amsterdam's Schiphol Airport for €12.5 mln or a yield of 8.4%. The BREEAM-certified building is let to hearing instruments specialist Sonion.

Keith Sutton, director of European Real Estate in Fidelity's Munich office: 'These deals showcase our strategy of targeting high-quality, second-tier assets in established markets let to high-quality tenants. With acquisition yields often in excess of 7%, the market today presents a rare opportunity to lock into highly attractive assets at very favourable prices. As equity investors, we are welcomed by vendors who seek a reliable counter-party.'

Sutton added that the fund manager has won new equity commitments this year. 'We expect to be investing a further €150 to €200 mln for this fund alone during the course of 2013. We shall continue to be very selective in our choice of assets.'

Fidelity is a Boston-headquartered financial services group that manages some $240 bn (€179 bn) of assets globally for private individuals and institutions.