Article date: 28 July 2006
Morley Fund Management, Europe’s largest property fundmanager* today launched the German Retail Investment Property Fund(GRIP).
The GRIP Fund is to be run in partnership with SachsenFondsAsset Management GmbH. SachsenFonds will be responsible for assetmanagement and Morley for fund management. This follows thesuccessful co-operation on the Aviva Central European Property Fundwhere Morley and SachsenFonds perform similar roles.
Ben Stirling the fund manager who heads up Morley’sEuropean property team believes Germany is set for an economicrecovery, and the GRIP Fund is poised to take advantage of it.
“We believe that the German economy will continue torecover over the coming years, and there will be opportunities toacquire retail property at attractive prices. With SachsenFonds weknow we have a strong partner who has an intimate knowledge ofGerman property markets.
“We have already secured a seed portfolio for the fund andhave assembled a strong pipeline of opportunities which we expectto close over the next few months. We are looking very carefully atthe quality of the assets and aware that there are a lot of factorsto take account of including regional differences throughout thecountry.”
Stefan Pfisterer, head of institutional funds at SachsenFonds,said: “We are delighted to extend our business relationshipwith Morley, and to do this in our German home market makes us evenprouder. We believe that the German retail market, althoughgenerating increasing international interest, still offers valuefor money.”
The fund will acquire a portfolio of retail properties locatedacross Germany over a three year investment period and will aim todeliver a minimum investor IRR (post fees, taxes and gearing) of atleast 10.0% per annum over its life, with a minimum “cash oncash” yield of 7.5%-8.5% per annum after the investmentperiod.
The GRIP Fund is aimed at institutional investors with a minimum€3 million investment. The objective is to raise €120million of equity and €180 million of debt (60% loan tovalue) to create a total fund (initial Gross Asset Value - GAV) of€300 million. Some €60 million of commitments havealready been raised and further equity commitment will be sought inthe latter part of 2006.
Morley revealed plans to invest £1 billion in continentalEuropean property two years ago. Since then it has invested £1.2billion and now has a team of 10 people dedicated to Europeanproperty.
If there is excess demand for the GRIP Fund then Morley has thediscretion to increase the fund’s size to €400 millionby raising an additional €40 million of equity. The fund hasa planned life of 10 years and will be a Luxembourg FCP (FondsCommun de Placement)**.
* Oxford Property Consultants, December 2005.
** The fund will be an unregulated collective investment schemefor the purpose of the UK Financial Services and Markets Act.Investment into the Fund will therefore be available only tointermediate customers and to those to whom the scheme can bepromoted under the Act. As this will be an unregulated collectiveinvestment scheme all or most of the protections provided by the UKregulatory system do not apply and compensation under the FinancialServices Compensation Scheme will not be available.
For further information please contact
StrahanWallis, Corporate Communications, Morley FundManagement, telephone: 020 7809 8618
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The Morley property team consists of over 70 investmentprofessionals and manages a range of funds on behalf ofinstitutional, pension and retail clients. Morley has been at the forefront of innovation inproperty fund management and has launched eleven specialist sectorbased funds with partners, including: Igloo Regeneration Fund,Quercus Healthcare Property, The Junction and The Mall.