GERMANY - Henderson Global Investors is seeking to tap demand from German institutional investors for exposure to their domestic retail sector.
The fund manager has launched the German Retail Income fund (GRIF), a specialist property fund that will focus exclusively on German retail parks and self-service department stores.
Investment criteria is for core property, serving large catchment areas, having been recently renovated and let to tenants of high financial standing.
The fund's target volume for the first closing is €200-300m, including gearing of 50%.
It will aim to deliver a minimum income return of 6% per annum.
Thilo Wagner, manager of the fund, said: "German retail parks offer attractive initial yields compared with those in other countries and with other commercial sectors in Germany.
"Investors in the sector benefit from stable and high cash flows, which in turn allow attractive payouts."
Wagner said German retail warehousing should satisfy bargain hunters looking for short-term "cyclical style" appreciation, as well as investors seeking longer-term performance stability.
"This fund will give German institutional investors direct access to prime assets while simultaneously profiting from our expertise."
Net initial yields of German prime retail parks were at 5.5-6.25% at the height of the boom, but are now at 6.75-7.5%, according to Henderson's research department.
The company expects retail warehouses on the whole to perform better than offices or shopping centres over the next five years.
Stefan Wundrak, researcher at Henderson, said: "Investors that fear they have missed the boat in the UK should now invest in good-quality retail parks and profit from cyclical recovery elsewhere in Europe.
"Once the current economic crisis has abated, the sector should prove increasingly attractive to shoppers and retailers alike."