ING REIM raises EUR 60m in first close of European mall fund

ING Real Estate Investment Management Europe (ING REIM Europe) has received EUR 60 mln in equity commitments in the first closing for its European Shopping Centre Fund (ESCF). The closed-end private real estate fund has a seven-year lifetime and will invest in shopping centres across Continental Europe.

The equity commitments came from five clients. ING REIM said that it is currently working with a group of investors to join in a subsequent closing in the coming months. The fund is expected to grow to EUR 750 mln in equity commitments with a maximum of 50% gearing at an overall level, hence a target gross asset value of EUR 1.5 bn.

ING REIM will mainly target shopping centres which are dominant in their catchment areas, strongly anchored and with a diversified tenant mix. The fund will invest in 15 - 20 shopping centres, manage them through the recovery in the markets and sell them within the lifetime of the vehicle to obtain the target returns.

The manager has selected 11 European countries based on their underlying economic fundamentals as well as retail real estate market characteristics, with a view to achieving a balanced risk exposure geographically. Investments in the core markets of Europe are expected to be in the area of 70% of the overall allocation with a view to extracting value mainly through rental growth with some yield compression. The balance is expected to be invested in ‘value add’ markets where value creation will be mainly geared towards yield compression.

Pieter Hendrikse, CEO ING REIM Europe, commented: 'We are very pleased with the support of our investors in this challenging equity raising environment. It shows our clients trust our capabilities as one of the main European retail players with more than EUR 10 bn in AUM, a unique platform of local offices and a solid outperformance track record. We will build on this initial success and we expect to reach our target equity raise during the year as we benefit from investors’ growing appetite for the sector.'