Redos and Union Investment team up on €500m German retail fund

Germany’s Redos Real Estate and Union Investment have announced that their new fund for German retail properties has already acquired four assets.

Redos Einzelhandel Deutschland – which has an equity target of €500 mln - has been established to invest in large-scale superstores, hypermarkets and retail warehouses. The fund is designed for institutional investors with a long-term horizon, including pension funds, superannuation schemes, banks, and insurance companies.

Union Investment will handle the administration of the fund as the third-party AIFM (Service-Kag), with Redos responsible for fund and asset management. The two companies will jointly manage the investor accounts.

‘The new institutional real estate fund has met with tremendous interest among a large number of investors,’ said Bernhard Kraus, managing director of Union Investment Institutional.

Kraus said €250 mln, or half the equity figure being sought, has already been raised. So far, €50 mln has been spent to acquire four properties for the institutional fund, while the deeds for several properties with an aggregate value of more than €70 mln are almost ‘signature-ready’.

Union Investment currently has a portfolio of 40 shopping centres in Europe valued at €6 bn. The German investor has actively sought to step up the size of its retail portfolio in the past few years, but the supply of relatively new large centres in dominant locations in Europe is diminishing and the opportunities revolve increasingly around refurbishment and redevelopment, chief investment officer Frank Billand told PropertyEU in a recent interview.

‘There are no shopping centres left,’ he said. ‘They’ve all dried up. When we did get involved in a deal, the negotiations took as much as a year and in one case even two. And they’re always too expensive when you want to buy.’