German resi investor launches €300m food retail fund

Deutsche Investment has launched its first investment fund in food retail, with a €300m (£256m) target volume. The fund, called Deutsche Investment – Food Retail I, will focus on food retail markets, namely discounters and full-line grocers, and grocery-anchored retail parks in Germany. These will be located in towns of more than 3,000 residents. Deutsche highlighted the resilience of the sector against the backdrop of the current Covid-19 crisis. It is structured as an open-ended, real estate special alternative investment fund. Deutsche, which mainly specialises in residential, also has five residential real estate funds and one office real estate fund. The €300m target is intended for investment in “sustainable and forward-looking” grocery retail locations. The net cash-on-cash yield targeted on the top fund level averages 5.25% to 5.5% pa. At this time, the fund is in its sales phase. The fund specifies a minimum subscription amount of €10m and aims for a gearing ratio of around 45%. Deutsche said its first investors have already subscribed, with initial investment properties already added to portfolio. These include a hypermarket in Lower Saxony, anchored by Bünting Group. Exclusivity has been granted for a further €30m. Transaction, asset and property management will be handled by DIR Deutsche Investment Retail. Susanne Klaussner, managing director of DIR Deutsche Investment Retail, said: “Due to its long-term leases with high-net-worth tenants and its stable rental yields, food retailing represents an attractive and sustainable investment product for institutional investors. “Especially in the current crisis situation, it becomes readily apparent that resupplying the population via the in-store food retailing segment plays a key role in Germany, and that this segment is clearly more resilient against the online competition than other retail segments.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette