Warburg-HIH Invest Real Estate GmbH (Warburg-HIH Invest) has launched two new retail real estate funds for institutional investors. Under the title “Warburg-HIH Perspektive Einzelhandel Deutschland”, the open-ended real estate special AIFs will invest in retail properties in fast-growing locations in Germany. In addition to the so-called “Big Seven” cities, eligible destinations include other major cities with favourable economic data, auspicious demographic outlook, and a strong position as retail location (purchasing power, centrality, etc.).
The investment fund “Warburg-HIH Perspektive Einzelhandel Deutschland / Fokus Geschäftshäuser” will focus on high-street commercial properties, whereas the “Warburg-HIH Perspektive Einzelhandel Deutschland / Fokus Fachmarktzentren” fund will put its emphasis on retail warehouses and local convenience centres.
The two funds are targeting investment volumes of €400m to €450m each. The planned equity volume for either fund equals approximately €250m, while the targeted gearing ratio is 45% based on the fair market value of the real assets under the fund’s management. Both investment funds will have a lifetime of 15 years; the return target for the fund focusing on commercial buildings is an annual distribution of four percent, whereas the distribution yield of the retail warehouse park fund is expected to be 5% p.a.
The investment strategy is based on the findings of comprehensive research done on Germany's retail market. The retail expert team of Warburg-HIH Invest, headed by Dr. Ludwig Vogel, developed a scoring model in this context that will help to preselect eligible investment locations.
“We rely on the experience of the HIH Group with retail real estate when structuring and managing these investment funds,” Dr. Vogel elaborated. The sectors retail and gastronomy account for nearly 30% (approximately €1.5bn) of the real estate portfolio under the management of Warburg-HIH Invest.
“Retail properties should be an integral component of any diversified portfolio,” Alexander Eggert, managing director of Warburg-HIH Invest and in charge of the product, company and fund management division, added. “Germany remains an attractive market because of its sheer size and its robust economic situation. International brands are keenly interested in maintaining a footprint in the EU's largest retail market.”
