Scottish Widows Investment Partnership (SWIP) and Cushman & Wakefield Investors (CWI) have announced the successful first close of their Pan-European Urban Retail Fund (the PURetail Fund) with 100 million in equity committed by three European institutional investors.
The Fund will be managed as a joint venture between SWIP and CWI in equal parts, holding responsibilities for fund management and asset management respectively. Following this first close, allowing for leverage, the manager will be able to deploy 200 million in acquisitions.
The PURetail Fund is of one of a few funds to succeed in raising capital for investment in the pan-European property retail sector since 2008, demonstrating the strength of investors' confidence in the management team and their ability to deliver on the research-led investment strategy.
The investment approach of the PURetail Fund is core plus and it will focus on the retail sector in high street and city center locations within stable and mature markets Germany, France, Sweden and the UK - which offer the greatest liquidity and opportunity to benefit from a general economic recovery. The Fund will look to source assets under 40 million with the aim of offering an attractive income yield to sophisticated institutional investors, as well as enabling the SWIP and CWI team to add value by actively managing the assets.
The PURetail Fund is targeting a net total return of 10-12% per annum, and will have a duration of eight years and a three-year investment period.
The total equity target of the PURetail Fund is 250 million and the Fund will remain open for a further period to allow for a second closing at a later stage. The Fund is structured as a Luxembourg FCP-SIF, regulated by the CSSF.
Malcolm Naish, Director of Real Estate at SWIP, said: "We are delighted to have the successful first closing of the Pan-European Urban Retail Fund. There is strong investor appetite for direct exposure to high street retail but it can be hard to acquire quality assets outside of domestic markets. Our research shows market pricing for assets remains attractive and the best retailers have shown resilience during the downturn taking space in the strongest locations in the best markets in anticipation of the upswing in consumer confidence and spending.
"The PURetail Fund will allow sophisticated institutional investors to get a stake in the high street across some of the main markets in France, Germany, Sweden and the UK where the Fund will focus on both core opportunities and those where the knowledge of the retailer and the asset enhancement skills of SWIP and CWI can add real value for our clients."
David Rendall, European CEO Cushman & Wakefield Investors, said: "The Pan-European Urban Retail Fund provides a compelling investment proposition to sophisticated institutional investors seeking stable income and moderate capital growth. We believe that there are numerous attractions of urban retail assets: low volatility and the best risk-adjusted return profile; lack of new supply in the best city locations; retailers' desire to use their high street locations to establish a customer experience to build loyalty; and environmental and demographic drivers leading consumers back to the city centers in favor of driving to out-of-town locations.
"Working together and using our combined expertise, CWI and SWIP will create a portfolio of highly attractive city center assets that will meet the needs of the retailers and investors alike."