Savills Investment Management (Savills IM) has announced the launch and first closing of its Europe V – Retail Fund targeting local shopping centres, retail parks, designer outlet centres and high street assets across Europe.
Europe V is targeting a total return of 10-12% net per annum after costs, fees and local taxes, including a yield of 5%-plus.
It has already made its first acquisitions, purchasing two assets in The Netherlands from pan-European retail real estate investment manager Redevco for €31 mln.These assets comprise two retail premises located in Breda and Almere, let to C & A, Esprit and JD Sports.
The fund is expected to deploy all initial capital imminently, with a further capital raise scheduled for Q2 2018.
Europe V marks the firm’s second recent European retail focused fund, following the launch of Nordic III – Retail in late 2017. Nordic III has acquired four retail parks from IKEA Centres for €125 mln following its first close and will invest in high street properties, locally-dominant retail centres, warehouses and retail parks across Sweden, Denmark, Norway and Finland. It is also expecting a second close in Q2 2018.
The two funds target different risk profiles. Europe V is a value-add fund whilst Nordic III is a Core/Core+ fund.
'We anticipate that the next 12 to 18 months will present some highly attractive buying opportunities in western European retail,' said Neil Varnham,fund manager of Europe V, Savills Investment Management. 'Many European economies have followed Germany and moved into a recovery phase with rising consumer confidence generating growing levels of sales which feed through to demand and rental growth.'
He added: 'To secure good returns it is essential to consider the key factors driving a locations success and failure. We will leverage our 13 office European platform, local market knowledge and extensive retail experience to source and add value to assets.'
Kiran Patel, Chief Investment Officer, Savills Investment Management, commented: 'Investors must be cognizant of the risk factors facing retail but also aware that the sector currently presents opportunities for managers able to identify the right assets.' Savills IM has identified six types of retail it believes to be resilient or primed to take advantage of changing trends. 'They include outlets/malls and retail stores or parks which combine retail with leisure and entertainment to provide consumers with an ‘experience’.'
With regards to the Breda and Almere asset purchases, Savills IM was advised by McDevitt, Dentors Boekel and Bouwkundig and Savills Building & Project Consultancy.
