by Jane Roberts
Despafonds is leading the charge by the giant German open-ended funds to broaden their UK property holdings by buying large shopping centres.
Sources say that Despa and its retained agents, Richard Ellis and DTZ Debenham Thorpe, have spent the past few weeks visiting more than 30 centres around the country. Despa alone could spend more than £200m.
Last week CGI, the investment arm of Commerz Bank which buys on behalf of the Haus Invest fund, became the first German fund to acquire a UK shopping centre. It paid £37.5m on an equivalent yield of 8.22% for Arcades (right), a 17,000m2 (183,000 sq ft) shopping centre in Ashton under Lyne. The scheme is largely let on turnover rents.
CGI’s Arcades purchase is part of a larger package with Dutch vendor MAB which also includes a Dutch shopping centre in Breda and may include an office building on Lanevoorhut in The Hague.
Other German funds are expected to follow suit. The biggest funds have allocations for property of at least DM1bn (£435m). DEGI, whose year-end is next month, is reviewing its property investment strategy for the coming year. One investment agent close to the market said: “All the German open-ended funds are keen to invest in the UK market and have been frustrated because they haven’t been able to get enough central London offices.”
Despa spent £180m in February on the Lloyd’s of London headquarters in Lime Street, EC3. This is the biggest office investment deal this year at a price refecting a yield of 6.25%. However, most of the German funds are said to be searching for investments showing returns nearer 8%.
