Schroders is launching a new REIT concentrating on continental Europe.
The new trust will invest across 12 cities to exploit the slower recovery of property markets across the region.
Duncan Owen, global head of real estate at Schroders, said the target cities combined a mix of GDP growth at two to three times that of the European average with strong infrastructure in place, or due in the coming months.
The REIT has started with a seed portfolio of £150m in Paris, France, and Berlin, Germany. It has a target of £500m at full capitalisation.
Owen said the REIT will take advantage of the situation where “really good institutional stock is really attractively priced in a number of the key cities in Europe, they are beginning to get sustainable rental growth which is a little behind parts of the UK market”.
Schroders will focus on “really good B+/A- assets” across central business districts in cities such as Paris, Lyon Frankfurt and Berlin, said Owen.
The company intends to pay a covered dividend of around 5.5% per annum with returns in the “high single digits”, he added.
Gearing will be low, with a target of 25% loan-to-value across the fund and a hard cap of 35%.
Investor appetite has been strong, according to Owen, with a number of investors from the company’s UK REIT seeking to invest in the new structure.
mike.cobb@estatesgazette.com
