Schroders launches new retail/logistics fund in Italy

Global asset management Schroders has launched its second closed-end property fund in Italy focusing on the retail and logistics sectors. The Schroder Italian Property Fund No. 2 will target a portfolio of between EUR 600 mln and EUR 750 mln. The new fund will provide institutional investors with the opportunity to invest predominantly in leased assets and, to a certain extent, property development. The fund may occasionally undertake speculative investments.

The fund is targeting an exposure to the retail sector (shopping malls and retail parks) of some 65%, while the logistics sector will account for the remaining 35%. Schroder's Italian fund aims to reach an Internal Rate of Return (IRR) of 10% to 11% and an annual dividend of more than 5%. The closure of the fund should take place after 12 years but the manager is guaranteed an option to close after eight years. Schroders' fund is focusing on investments with up to 65% financial leverage.

‘We forecast that the shopping centre sector will outperform in Italy compared to the rest of Europe, with annual profits of around 9% on average for the next four years. The growth is due to the consolidation of the sector, which is still very fragmented. The retail pipeline for the period 2007-2009 represents about 35% of the current stock in Italy and is located mainly in the south of the country,’ said Marco Dall’Orso, managing director of Schroder Property Investment Management.

Schroeder Property Investment Management Italy has a portfolio of about EUR 750 mln in Italy. It consists of shopping centres and logistics assets.