AEW Europe Fund targets resilient French retail property sector with €176 million capital raise (FR)

Pan-European real estate investment manager AEW Europe has raised a further €176 million from institutional investors for its strongly performing French core retail fund Fondis.

This sector has proved to be particularly resilient during the economic crisis and AEW Europe's research concludes that the French retail market should continue to outperform the European retail market overall.

Stéphane Sebban, Fondis Fund Manager said: "The ability of the Fondis Fund to attract significant amounts of new capital in extremely difficult market conditions demonstrates the fund's strong track record and the confidence of investors in the future prospects for the French retail property sector. We see particularly good investment opportunities in town centers and more secondary retail locations in France."

The €176 million capital raise will provide the fund with a further €320 million of buying power.

The fund's strategy is to focus on lot sizes of up to €70 million, across the spectrum of French retail properties from high street stores, to megastores and retail parks, and shopping center developments. The new injection of capital will double the Fund's portfolio from €360 million to approximately €700 million when fully invested.

The Fondis Fund has produced an average annual total return of 14% over the last 10 years and its portfolio currently consists of 50 properties leased to 135 tenants.

For the last 20 years, France has had the strongest population growth of the four largest European Union countries, including Germany, Italy and the UK, and this trend is expected to continue for the next decade. The relatively high birth rate is a primary driver of growth and has underpinned the resilience of the French retail sector.

France had much fewer retailer bankruptcies during the "Great Recession" than the UK and the sector has continued to see a healthy rate of expansion by both international and domestic retail occupiers. AEW Europe's research concludes that if the global economy lurches into another downturn, then the French retail real estate sector is again likely to demonstrate its defensive investment qualities.

France has one of the most diversified and largest retail property markets in Europe and unlike other European markets, strong investor demand and keen pricing for shopping centers has not limited institutional investors' options. The country has almost 50 million m² of out-of-town and high-street retail space, providing investors with a diversified and deep base of investible retail stock.

Rob Wilkinson, Chief Investment Officer at AEW Europe concluded: "Our research indicates that the French retail property sector should continue to provide some of the best investment opportunities among the major European markets. The Fondis investment team has a long-term track record of accessing these opportunities for our institutional clients and now has successfully expanded its capital base to allow it to nearly double the size of its French retail portfolio."

Source: Bellier Financial

Related News