Union Investment is launching a new fund for European retail property. The planned total size of the new fund is EUR 750 mln, with debt finance accounting for 30% to 40% of the total.

Investors have already pledged more than EUR 300 mln in equity to UII Shopping Nr. 1, the German fund manager said in a statement on Monday.

Union Investment said that UII Shopping Nr. 1 allows investors to benefit from the performance of European retail properties and achieve greater diversification of their property portfolio. Over the past three years, the fund manager has steadily expanded its portfolio in this segment and purchased European properties for around EUR 2 bn.

'With their low vacancy rates, dependable cash flows and attractive medium-term total returns, retail properties - especially premium shopping centres - are a compelling proposition in the current market environment,' said Christoph Schumacher, deputy managing director of Union Investment Institutional Property.

He added: 'Our new thematic fund UII Shopping Nr. 1 allows institutional investors to benefit from the positive prospects for returns offered by retail property and provides the perfect opportunity to broaden their portfolio.'

The fund's investment universe comprises the key eurozone countries of Germany, France, Belgium, Italy, the Netherlands and Austria. Properties in Poland and the Czech Republic may also be added to the mix.