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Henderson’s German JV completes fund raising for second Austrian Fund

Henderson Global Investors’ German joint venture - Warburg - Henderson KAG, has successfully completed the equity raise for its property fund - Warburg - Henderson Österreich Fonds Nr. 2.

Henderson Global Investors’ German joint venture - Warburg - Henderson KAG, has successfully completed the equity raise for its property fund - Warburg - Henderson Österreich Fonds Nr. 2.

The Fund has raised €180 million from German and Austrian investors, which provides it with c.€360 million of firepower to deploy in the Austrian property market, including debt.

The Fund which invests in a diversified commercial property portfolio in Austria aims to achieve an annual total return on capital invested of 7 per cent. The investment focus is on core to core-plus retail properties across Austria as well as office properties specifically in Vienna.

Initial acquisitions included a 4,700 sq m retail warehouse in Vienna, a 10,400sq m high street retail asset - Intersport Eybl - in Vienna and a 15,000 sq m fully let retail warehouse in the Austrian city of Fürstenfeld.

Since then, the Fund has acquired a shopping centre – “Stadtparkcenter” - in Spittal a.d. Drau/Carinthia which provides over 14,200 sq m of rental space with direct access to the train station and, more recently, the 13,440 sq m Infra Center in Linz which boasts an excellent tenant mix.

It has also exchanged contracts on a further retail warehouse which is due to complete before year end. The Fund plans to acquire between 10-15 assets in total and is confident that the investment phase will be complete by the end of 2013.

Clemens Rumpler, Head of Property Investment Austria, Henderson, said: “ We are delighted that the fund has been so well received by risk averse institutional investors who recognise that the Austrian real estate market is ideally suited for investors who want to diversify away from existing investments in Germany. Like Germany, the robust letting market - a result of the strong economy - demonstrates stability. But in addition, the proximity and close links with central Europe offer further growth drivers.

“We have already made significant progress in implementing the investment strategy, testament to our local expertise and market access. The fund is already 35% invested with a well diversified initial portfolio which we are confident will deliver long term solid performance for our investors.”

Stefan Wundrak, Director of Research, Property at Henderson, added: “Retail sales growth in Austria has been growing slowly but reliably over the last couple of years. Forecasts suggest that this trend will continue. Austria benefits from the strength of the German economy as well as higher growth rates in their main trading partners in Central and Eastern Europe. We like the stable and broad base of retailers, giving a good scope for tenant engineering. In particular the retail warehouse sector benefits from the improved quality of new and refurbished assets attracting new retailers, previously focused on shopping centres and high streets. Pricing is attractive as only few international investors are active in Austria at all and many local investors and banks are hamstrung by exposure to risky investments dating from the boom years.”

According to Investment Property Databank (IPD), institutional investors were able to realise a higher total return with Austrian assets in 2011 than in 2010, despite the economic uncertainties in Europe: IPD’s Austrian Property Index recorded an average return of 6.3 %, split into an income return of 4.7 % and capital growth of 1.6 %.

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