EUROPE - The property fund management joint venture between Henderson Global Investors and M.M. Warburg, Warburg-Henderson KAG, has announced the launch of its third fund, Pan-Europa Fonds Nr.1.
The fund's strategy is to invest primarily in core office and retail properties and will initially focus on the key European investment markets, namely France, Germany, Italy and the UK. Once an initial portfolio is established, further opportunities in the Benelux and Iberia will be pursued.
The assets will be sourced and managed in Germany by M.M. Warburg's property asset management subsidiary, HIH Hamburgische Immobilien Handlung, and in the rest of Europe by Henderson.
The fund's three lead investors are a combination of German and Austrian institutions that have made an initial equity commitment of E150m. The fund is expected to grow to around E250m in equity commitments. The fund will be geared to a maximum of 50% loan to value, so that the total property portfolio is expected to be between E300m and E500m. Minimum investment is around E25m.
Michael Howard, the manager of the fund said: “Our investors are seeking stable returns from property as an antidote to volatility in the equity markets. Quality assets providing secure, long-term income are at the top of our shopping list.
This core Pan-European product follows the launch at the end of 2002 of two country funds aimed at delivering opportunistic and core returns in the German and Austrian markets respectively.
Howard said of the fund: “It will be investing substantially in offices, although with a significant weighting to retail. It is investing in major cities where there are administrative or financial centres. About three quarters will be invested in France, Italy, the UK and Germany.
“However, Germany is slightly on the back-burner. The other three countries have a good steady flow of product, and we are making first offers on property there.
“But, overall, the state of the German economy is really reflected in the German property market. We expect a correction in the German property market.”
He added of the European real estate market: “Italy is doing well - rents in Milan are up, for example.
“In France the occupier market is weak but the investment market is held up by demand from foreign investors, such as from Germany. In the UK, the London market is overpriced but there is potential in the regional markets.”
Henderson Global Investors is the investment management subsidiary of AMP, the international financial services group.
It manages E137bn as at 31 December 2002 in assets and employs around 1,500 people around the world.
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