Erlangen-based GRR Real Estate Management GmbH (GRR REM) has launched a real estate fund, concentrating on retail property in the 'Basic Retail' segment.
The fund, which qualifies as Immobilienspezialsondervermögen (a special real estate fund) under German investment law, is aimed at institutional investors looking to invest in retail property with long-term leases and stable cash flows.
The minimum participation is an investment volume of 10 million. The fund has already been successfully issued and launched. In the first closing, GRR REM has already accumulated 50 million from firms in the German insurance industry (HUK Coburg und WPV). Property worth around 100 million can now be purchased for the fund.
During the investment period of two to three years, the volume of the fund should increase to almost 300 million, around half of which will be financed by equity capital. Around 70% of the rental income will come from food retailers. Risk diversification will be achieved by distributing the investment volume over approx. 40 properties and by a robust spread of business types, regions and retail groups.
Properties to be considered will have lot sizes ranging from 3 to 15 million, anchored by long-term leases to good covenants from the 'Top 20' of German food retailing. The average distributed yield of the GRR German Retail Fund No. 1 is forecast to be well in excess of 6% p.a.
GRR REM will be responsible for acquisition of the properties and the real estate management. The administration of the fund will be carried out by IntReal International Real Estate Kapitalanlagegesellschaft mbH, a Service-KAG (capital investment company) specialising in real estate funds.
IntReal has initiated and now administers around 30 different real estate funds, with a current investment volume exceeding 5 billion. Jones Lang LaSalle will assist GRR REM in the fundraising.
The interest in GRR REM's first investment fund comes as no surprise for Susanne Klaussner, Chairperson of the company's management board: "As we saw last year, the retail property segment continues to be a favorite with investors in 2012, as it is a relatively crisis-proof asset class with above-average growth prospects.
"The management and operations of the GRR German Retail Fund No. 1 will be carried out by two very experienced specialists at GRR REM and IntReal. We acquired around half of the more than 290 properties that we currently manage on behalf of our clients, so I am very confident that we can implement the fund's investment strategy successfully and efficiently. We are already in advanced stages of negotiation with several vendors."
GRR REM defines the term 'Basic Retail' as including retailers whose product ranges mainly comprise goods for daily requirements. As well as food discounters and full-range supermarkets, they also include retail warehouse centers and local shopping centers.
Source: Targa Communications