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Getting real with real estate in central and eastern Europe
Accession Fund to invest up to €300 million equity in property
Ahead of European Union enlargement in May, demand for real estate in the countries of central and eastern Europe is already on the rise. To satisfy investors’ interest in this growing market, Italy’s Assicurazioni Generali S.p.A is setting up the Accession Fund, whose expected total €300 million of equity could eventually be leveraged into €1 billion worth of property acquisitions. Generali will contribute €90 million, while the EBRD will invest up to €75 million, or 25 per cent.
The Fund will invest primarily in income-producing assets such as office buildings, retail property and warehousing and logistics property. After attracting institutional investors and building up a solid property portfolio, the Fund intends to enable individual investors to participate as soon as market conditions allow. Toward this end, the Fund will be set up as a SICAV (société d’investissement à capital variable) under Luxembourg law. It will be operated by GLL Real Estate Partners GmbH of Munich.
Noreen Doyle, EBRD First Vice President, said having the structure and flexibility to permit the future participation of private investors is one of the Fund’s key features. By bringing this form of investment into the region for the first time, the EBRD is supporting the development of the market for private retail investment in central and east European property.
Gerd Kremer, Managing Partner of GLL and Chairman of Accession Fund, said that the Fund is an excellent opportunity for institutional investors, together with the EBRD and Assicurazioni Generali, to take advantage of the medium term capital appreciation of commercial property in the EU accession countries. By combining GLL’s investment management know-how with the local regional network of Generali and Lend Lease, it has a unique sourcing and management platform to build a balanced portfolio of institutional quality. “We are targeting a 15 per cent annual return”, he added.
The Generali Group is one of the top-twenty insurance groups in the world and ranks fourth in Europe with a 2003 premium income of €49.6 billion at a consolidated level (+5.8 per cent). Generali Group, through Generali Holding Vienna, operates in 7 central and eastern European countries: Croatia, Poland, Czech Republic, Hungary, Romania, Slovakia, and Slovenia.
The EBRD has so far invested €191 million in property funds across central and eastern Europe.
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