Real estate investment manager Savills Investment Management (Savills IM) has launched another German real estate special fund for institutional investors, Savills IM European Logistics fund 3 (ELF 3).
The strategy focuses on investments in high-quality distribution centres and cross-docks that can be used by third parties in Europe's core liquid logistics markets. With a target investment volume of at least €600m and a maximum debt ratio of 50%, the fund targets an income return of at least 5% annually. The fund has already received capital commitments of €122m from two German institutional investors at first close.
The investment style of the open-end special alternative investment fund (Spezial-AIF) is core/core-plus, although selected properties with asset management potential may also be considered. The strategy envisages the greatest possible diversification in terms of geography and different user segments, including industry, trade and services. A first distribution centre in Wrocław (Poland) with an investment volume of around €35m is already being examined for purchase.
The predecessor fund, European Logistics fund 2 (ELF 2), was closed to new investors at the beginning of 2019. With €560m of capital it raised more than twice the originally targeted €250m. With a total return of around 7.9% per annum since its launch in July 2015, ELF 2 has also exceeded its return targets. ELF 2 currently holds a total of 22 logistics properties in six countries with an investment volume of around €645m.
Since the beginning of the year, eight purchases have been made for the fund and a purchase agreement has been signed for a logistics complex under construction in the Nuremberg metropolitan region, which will be transferred to the portfolio after completion in Spring 2020. Together with other properties that are currently being reviewed for acquisition, the fund will grow to a volume of almost €900m.