ING Real Estate Investment Management Europe (ING REIM Europe) has had a first closing for its European Shopping Center Fund (ESCF), a closed-end seven-year lifetime, private real estate fund that will invest in shopping centers across continental Europe.
ING REIM Europe has closed the Fund with the support of five clients totaling 60 million in equity commitments. ING REIM is currently working with a group of investors to join in a subsequent closing in the coming months. The Fund is expected to grow to 750 million in equity commitments with a maximum of 50% gearing at an overall level, hence a target gross asset value of 1.5 billion.
ING REIM will mainly target shopping centers which are dominant in their catchment areas, strongly anchored and with a diversified tenant mix. The Fund will invest in 1520 shopping centers, manage them through the recovery in the markets and sell them within the lifetime of the vehicle to obtain the target returns.
The Manager has selected 11 European countries based on their underlying economic fundamentals as well as retail real estate market characteristics, with a view to achieve a balanced risk exposure geographically. Investments in the 'core' markets of Europe are expected to be in the area of 70% of the overall allocation with a view to extracting value mainly through rental growth with some yield compression. The balance is expected to be invested in 'value add' markets where value creation will be mainly geared towards yield compression.
Pieter Hendrikse CEO ING REIM Europe comments: "We are very pleased with the support of our investors in this challenging equity raising environment. It shows our clients trust our capabilities as one of the main European retail players with more than 10 billion in AuM, a unique platform of local offices and a solid outperformance track record. We will build on this initial success and we expect to reach our target equity raise during the year as we benefit from investors' growing appetite for the sector."
"ESCF benefits from excellent market timing. At this point in the cycle, yields are above historical long term averages and offer an unprecedented spread to interest rates. This is happening in the context of stronger sales performance by retailers which hints healthy rental growth in the coming years. This is especially true in the Western European markets where the investment focus lies now. With this as a background, we are excited because we are seeing very good investment opportunities. The team has secured an investment in Sweden and is in discussions for buying shopping centers in Germany, France and the Netherlands; where rental growth is anticipated to materialize earlier," says Florencio Beccar, Fund Manager ESCF.
Source: ING REIM