Standard Life Investments makes 1st acquisitions in German property market

Standard Life Investments today announced that it has made its first acquisitions in the German property market as part of a euro91m strengthening of its European Property Growth Fund (EPGF).

EPGF has purchased a single let logistics warehouse in Neuss, Germany.

The euro17m acquisition consists of 22,000 sq.m of warehousing space and represents an attractive yield corresponding to the high quality of the building and the tenant.

It is let to Asics Europe BV, the sportswear manufacturer, and is situated in an established distribution location 1km east of the A57 motorway.

The Fund's second German acquisition is an industrial estate in Rattingen, located to the north of Dusseldorf close to Dusseldorf airport.

Purchased for euro15m, the estate is multi-let with some vacancy covered by a rental guarantee.

Further acquisitions for EPGF continued in Central Europe with the euro13.2m purchase of a single let retail warehouse in Brno, the Czech Republic's second largest city 200km south east of Prague.

Let to the furniture retailer Sconto Nabytek it totals 13,200 sq.m.

and represents an initial yield of 6.91%.

In addition, EPGF committed euro38m to Hungary via a portfolio of three properties - two modern fully let logistics warehouses at Gyor and Jaszbereny (let to a Hungarian subsidiary of Renault and Hilite International respectively) and the forward purchase of a pre-let distribution facility in Budapest.

Other activity included a 14,195 sq.m extension to a logistics warehouse near Willebroek, Belgium.

Will Fulton, Manager of the European Property Growth Fund, Standard Life Investments, said: "With another euro91m invested in bricks and mortar, the portfolio has remained focused on acquiring high quality commercial properties with excellent prospects for growth".

"In line with this theme of growth we have made our first investment into Germany".

"Having purposefully stayed out of the German market for 10 years, our analysis of pricing against improved economic confidence highlights an increasing demand for industrial and logistics service providers." "We have also continued our investment in Central Europe with the purchase of our first retail property in Brno, Czech Republic and strategic logistic assets in Hungary".

"Along with a healthy yield margin over Western Europe, the Czech Republic benefits from high consumption growth which in turn is an excellent driver for rental growth." "Taken together, these acquisitions will serve to sustain the strong performance that the European Property Growth fund has generated since its launch".

"The outlook for the commercial property market in Europe remains attractive and I am looking forward to announcing further acquisitions we are working on in the near future." For the 12 months to September 2006, the fund returned 25.8% (net of all fees).

In October 2002 Standard Life Investments successfully closed EPGF, exceeding its original target and resulting in a total geared fund size of 300m euros.

EPGF was restructured in June 2005 principally due to demand from existing partners to extend the life of the fund and give it greater flexibility.

The fund was also expanded to allow access to new investors and was heavily oversubscribed at its new close.

As a result, it moved from a closed-ended, finite life structured fund to an innovative open-ended unitised structure.

Once fully invested and 50 per cent geared, EPGF will have a fund size well in excess of 800m euros.

The current value of the fund is just over 550m euros.

The objective of the fund is to invest in a high quality diversified portfolio of commercial properties across Europe, with a focus on mature, developed Eurozone markets.

The fund invests predominantly in the office, industrial/logistics and retail sectors with a view to maximising capital growth by active asset management.

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