OverseasProperty:A new investment vehicle that targets the Continental retail property sector has been announced.
The "European retail property portfolio" already holds properties valued at over €1 billion and expects to raise at least €150 million in investor funds. Bank of Ireland Group is behind the new fund, which gives investors a chance to link into capital growth from retail commercial properties on the Continent. The fund already holds a retail park in Liverpool, and a retail park in Zaragoza, Spain. These will make up about two-thirds of the final portfolio, according to BOI.
The company says that this is a dedicated fund that will only purchase retail property. It argues that this represents a safer diversified mix given the three to four professionally managed retail properties the fund is expected to hold will vary in terms of retail concepts, locations, and leases.
Bank of Ireland Private Banking will manage the portfolio with the aim to maximising returns. The portfolio plans to pursue an investment horizon of seven to 10 years so that any capital appreciation from an expected upturn in the retail property sector in core European countries can be added to rental returns.
Access to the portfolio is through Bank of Ireland Life and the group's private banking division. About two-thirds of the price of the properties acquired will be financed through borrowing (gearing).
"Retail parks continue to be the most sought-after commercial property in the European market, with total investment volume reaching €15 billion in 2006, reflecting a 60 per cent increase from 2005," according to Mr Peter Collins, director, BOI Private Banking.
Bernard Walsh, head of investments at Bank of Ireland Life, says: "The European economy has performed strongly in the last five years. This growth has driven improved consumer confidence and incomes, which combined with positive demographics in the main European countries, provides a very favourable backdrop for investing in the European retail sector."
