Cordea Savills, the international property fund manager, is reopening its Nordic Retail Fund to raise additional capital for further investment. The Fund has a total return target of 10% p.a. and focuses on both in and out-of-town retail formats where there is a strong income profile and the potential to add value.
The Fund, which was launched in December 2007, has generated strong performance during a period of testing market conditions. It currently has a 125-million portfolio comprising three assets offering an attractive combination of income underpinned by indexation and a number of planned asset management initiatives.
Håkan Blixt is the Cordea Savills Nordic Retail Fund's Portfolio Manager and a veteran of the Nordic investment markets, having transacted 2.3 billion over a 25-year career. He has identified opportunities to acquire attractively priced properties where total returns in excess of 10% can be achieved.
Commenting on the reopening, Blixt said, "We are able to source stock with yields of over 6% where there is the potential to develop the tenant mix or extend the net lettable area and so enhance total returns. The key is stock selection with assets dominant in their catchment and anchored by strong tenants.
"There are a number of opportunities to add value by refurbishing and extending older stock as many of the shopping centers were completed over 20 years ago. Many use common areas inefficiently and contain old office space that can be converted for retail use. With retail parks there is often the opportunity to increase the lettable area as well as the potential to improve tenant mix and increase footfall."
The investment fundamentals of the Nordic property markets are positive. Lease structures are landlord-friendly and rents are indexed annually to inflation. There is transparency and ease of entry and exit thanks to improving liquidity. Additionally, the Nordic region's very low vacancy rates for prime retail space are a robust foundation, given strong tenant demand.
Projections for Nordic consumer spending growth are particularly supportive of the retail sector. This gives scope for further rental growth as the economic and consumer recovery continues, especially as retail rents are still affordable in Nordic markets in comparison to prime markets elsewhere in Europe1.
The Nordic Retail Fund is a Luxembourg-domiciled, closed-ended 'funds commun de placement fonds d'investissement specialise' (FCP-FIS) and is open to new investment.
Source: Citigate Dewe Rogerson