Property fund manager Cordea Savills and New Ireland Insurance are seeking to raise €15 million from Irish retail investors to contribute to a €250 million unit-linked fund to invest in the Italian commercial property market.
Cordea Savills is part of Savills, the British group that acquired the Irish auctioneer Hamilton Osborne King for €50 million last year. This investment is part of a wider offering from its international operations to institutional property investors. The minimum retail investment is €200,000.
The group manages assets worth €4.2 billion for pension funds, private investors and charities. The Cordea Savills Italian Opportunities Number Two Fund will be managed by the firm's office in Milan.
"Italy has a relatively strong, wealthy economyand active commercial property markets," said Matt Jones, director at the firm's Dublin office.
"It has a robust lease structure which provides landlords with reasonable security and has a relatively strong occupational market. Strengthening cross-border investment flows are demonstrating increasing demand from institutional and pension fund investors."
The new product is the second Italian fund from Cordea Savills, which has offices in London, Munich, Paris, Milan and Dublin. The first was introduced last July, with €250 million in equity in leveraged investments with a gross value of some €1 billion.
Cordea Savills' Dublin office also said it placed €14.25 million in equity from Irish investors in an €185 million single portfolio transaction in the Italian market.
The new fund is expected to exploit "wholesale to retail" portfolio break-up deals in Italy and opportunities to reposition secondary properties through tenant reconfiguration, refurbishments and reletting. Opportunities to provide third-party capital in joint venture with local partners will be sought, as will acquisition opportunities from government and corporate sale and leaseback deals.
Cordea Savills said aspects of the Italian market display features similar to central European markets that have generated big returns for investors. The firm said such features included an "opaque" property market with significant barriers to entry.
Citing high levels of owner-occupation, the firm said market players with local knowledge and relationship were able to take advantage of deal flow as companies transferred property assets off their balance sheets.
It also said there was a historic lack of asset management in the market, resulting in the availability of underperforming properties that could benefit from professional management expertise.
