Savills Investment Management, the international real estate investment manager, has launched Nordic Fund III – Retail. The Fund has raised €110m ahead of its first close and has acquired four Swedish retail parks located alongside IKEA stores as its first assets.
Nordic III – Retail is a Core+ fund which targets a net return of 7-9% per annum, including income in excess of 5.5%, by investing in high street properties, locally-dominant retail centres and warehouses, and retail parks across Sweden, Denmark, Norway and Finland. The Fund will leverage Savills IM’s Nordic platform and retail specialists to drive net operating income and capital returns.
The four assets that have been purchased for a total of c. €130m from IKEA Centres on behalf of the fund are retail parks located next to IKEA stores in strong catchment areas. These assets are located in Borlänge, Uppsala, Uddevalla and Haparanda. They all have a strong and diverse mix of tenants with strong national brands, in addition to the IKEA stores.
Justin O’Connor, Chief Executive Officer, Savills Investment Management, commented: "Nordic Fund III – Retail will take advantage of our strong retail experience, with c. €4bn of retail assets under management, and the strength of our Nordics platform to source stock and generate net operating income."
Peter Brostrom, Head of Nordics, Savills Investment Management, commented: "Nordic retail real estate offers the potential for attractive and stable income returns, thanks to a prevalence of long-term lease contracts and annual indexation. The macroeconomic fundamentals are also strong and pricing is generally favourable compared to other sectors, resulting in higher yields. The four assets purchased from IKEA Centres complement the Fund’s investment strategy of driving returns by increasing income, reducing costs, enhancing the tenant mix and using building rights to secure income to extract additional value.”
