Retail real estate specialist ECE Real Estate Partners has set up an open-ended pan-European shopping centre fund. The new “ECE Progressive Income Growth Fund” (EPIG Fund) has secured equity commitments of more than EUR 700 million from a leading global institutional investor base and has acquired a seed portfolio consisting of dominant shopping centres in Germany, Austria, Denmark, Poland and Italy with a market value in excess of EUR 1.6 billion. For the upcoming years, further acquisitions of dominant European shopping centres are planned.
The EPIG fund is aimed at long-term investors striving for stable regular distribution yields of around 6-7% p.a. in the current low interest-rate environment. Strong alignment of interest has been secured by the Otto family acting as an anchor investor. The EPIG Fund will exclusively invest in market-leading shopping centres benefiting from prime locations in select European cities with attractive economic fundamentals and growth forecasts.
Investment opportunities arising from structural changes in the retail sector
In a retail environment characterised by continuous dynamism and rapid change, ECE Real Estate Partners intends to take advantage of attractive investment opportunities arising from the ongoing structural changes. With net initial yields ranging from 4.0% (Germany) to 6.0% (Italy), the European market for shopping centres is currently valued at historical lows when compared to government bonds and other forms of real estate such as logistics, office and residential.
In addition, market-leading shopping centres in easily accessible central locations with a high quality of stay, an attractive gastronomy and strong service offering are increasingly gaining market share in a polarising retail market.
High-quality seed portfolio of six superregional shopping centres in growth regions
Including Stern-Center Potsdam, LOOM Bielefeld, Megalò Chieti, G3 Gerasdorf/Vienna, Galeria Kaskada Szczecin and Rosengårdcentret Odense, the seed portfolio comprises six superregional shopping centres with a total leasable area of 350.000sqm and 750 shop units, attracting more than 45 million visitors annually. The assets were owned by the ECE European Prime Shopping Centre Fund, a closed ended value-add fund that in the course of the past years invested extensively in the modernization, expansion and value creation of the centres.
“With our high-quality seed portfolio consisting of dominant shopping centres situated in prime locations within European growth cities, we are in an excellent position to generate attractive sustainable dividend yields for our investors long-term. In addition, we see future attractive opportunities arising from our continued development and positioning of our centres into omni-channel trading platforms“, says Dr. Volker Kraft, Managing Director of ECE Real Estate Partners.