Henderson finds investors for €1.4bn factory outlet fund, and Axa reaches first closing of development fund

Two large European property funds have raised a total of €285m as investor interest in Europe continues to grow.

Henderson Global Investors has raised €55m from new investors for its €1.4bn European factory outlet fund, and Axa Real Estate Investment Managers has raised €230m for its Development Venture III this week.

Henderson, which manages the European Outlet Mall Fund with outlet specialist McArthurGlen, plans to expand its portfolio of factory outlets further. It is especially interested in opportunities in France, Spain and Germany.

As revealed by Property Week (global, 26.06.09), it is on the hunt for new schemes and development opportunities. The money will also fund extensions of its existing assets.

The fund has attracted two new investors and it hopes to leverage at around 50%. Following the sale last month of its factory outlet in Troyes, France, to Resolution Property, it now has €140m of equity to invest. The fund is still open to new investors.

Henderson and McArthurGlen will develop new phases at centres such as Berlin, Germany (Phase 2 opening in September 2010), and Castel Romano in Spain.

The fund was launched in 2004, is leveraged at around 36% and has a target IRR (internal rate of return) of 13%. It owns eight outlets across western Europe and 22% of three outlets in the UK. McArthurGlen carries out the day-to-day management of the centres.

David Williams, fund manager at Henderson, said: “The factory outlet sector has become more attractive to many more investors, who now see it as pure retail, rather than a niche sector.

“Retailers are devoting more time and effort to developing their outlet businesses. Often they will open outlet stores to test new areas for the business.

“We are extremely interested in investment opportunities in Germany and are also looking with a lot of interest at the French and Spanish outlet markets.”

Outlet malls specialise in discounted, branded goods sold directly by manufacturers, and have traded better than many full-price retail centres across Europe in the past two years.

Williams added: “Since 2007, we have not seen any increase of tenants in administration and I believe it is a very resilient, strong sector.”

Axa REIM raised €230m at the first closing of its pan-European development fund Development Venture III. The European real estate manager raised the money from four investors, together with co-investment from insurance companies of the Axa Group.

The fund manager aims to cap equity raising at €600m at a September closing and has a target IRR of 25% gross.

By Laura Chesters

Source : www.propertyweek.com, 16 July 2010