Savills Investment Management (Savills IM) has launched a European food retail–focused fund, the Savills IM European Food Retail Fund.
The German special fund has received capital commitments of €109 million from six German institutional investors at first closing.
Savills IM said it has acquired a Danish supermarket portfolio of 38 urban properties for €140 million in a sale-and-lease-back transaction based on a yield of 5% for the new food retail fund.
The assets are let to the food discounter REMA 1000 Denmark on a 15-year fixed-term. The subsidiary of the Norwegian food trading group Reitan Handel has a market share in the Danish food retail market of 15.5%.
“We are delighted to have been able to work with REMA to close this major deal. We look forward to a long partnership with REMA to help maintain and develop their position as a leading supermarket operator in Denmark. This is the first transaction for our new flagship grocery fund, which will be investing in food retail across Europe. There is significant appetite for this sector among our investor base and we look forward to further significant transactions in 2021,” said Ian Jones, Director of Investment at Savills Investment Management.
As a core/core-plus fund, the European Food Retail Fund mainly aims to achieve a sustainable annual distribution yield of at least 5%. The forecast yield for the Danish seed portfolio exceeds this target. The fund target size is at least €750 million with a maximum debt ratio of 50%.
”While the main fund strategy is to acquire further supermarket portfolios with lot sizes usually starting at c. EUR 50 million, the fund may also acquire neighbourhood centres, mixed-use urban properties and specialist retail centres provided that they have a food retailer as an anchor tenant and at least 70% of the rental income comes from food/grocery and basic services tenants. At least 85% of the rental income at the portfolio level will come from supermarket/food tenants,” said Savills IM in a statement.