CBRE aims £500m fund at European shopping centres

CBRE Global Investors is preparing to launch a second £500m European Shopping Centre Fund.

The global investment management firm, which has more than £56bn in assets under management, is expected to launch the new fund towards the end of the year or early in 2015.

Sources said the fund would be a similar size to the first fund, which launched in December 2010 and is now fully invested with more than £500m in assets under management. The seven-year closed-end fund made its final acquisition in July when it bought Valbo Köpcentrum shopping centre in Gävle, Sweden, in partnership with the Teacher Retirement System (TRS) of Texas.

The second fund is expected to target a similar return of 11% to 13% . However, the strategy of the new fund will be different. The first fund was focused mainly on northern Europe, acquiring shopping centres in countries such as Germany, Belgium and Sweden.

By contrast, the second fund will consider buying good-quality shopping centres in countries in southern and central Europe where there are good prospects for economic recovery. Value change is therefore expected to be the main component of returns, whereas the first fund focused on buying shopping centres in strong economies with a high income yield.

Last month, CBRE Global Investors announced the acquisition of El Boulevard Shopping Centre in Vitoria, Spain, for €153m (£120m) on behalf of a third party investor. It highlighted growing investor interest in the region.

“This purchase shows that there are interesting and well-performing shopping centre investment opportunities in the Iberian Peninsula, an area that has seen increased attention from the investment market over the last twelve months,” said Jeroen de Grunt, portfolio manager separate accounts Continental Europe.

The first European Shopping Centre Fund had 26 equity investors who committed about £240m, as well as £68m from TRS for partnership deals, giving it an LTV of about 30%.

CBRE Global Investors declined to comment on the launch of the second fund.