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LONDON-REIT Asset Management has paid euro 217 million ($256 million) for a property portfolio in Italy. The private group picked up 21 retail properties in Italian cities including Rome and Milan in a joint venture with its local partner, Aedes Financial Services. The transaction expands REIT Asset Management's holdings outside the UK to euro 1.33 billion ($1.57 billion).

The REIT plans to open an office in Milan and will work with Aedes on more deals in Italy. The group has hired Chris Horler, a former Royal Bank of Scotland and Bank of Scotland executive, to head its European expansion drive.

A growing number of British investors, including Slough and Prudential, are turning to continental Europe for deals, because yields in their home market have reached record lows. A recent report by CB Richard Ellis predicted that European investment in 2005 is set for a record high, easily surpassing 2004's total of euro 103 billion ($121 billion). Investment in the 15 pre-enlargement European Union members was euro 55.2 billion ($65 billion) for the first half of 2005--22% higher than the same period last year.

The report also found that 54% of the total value of transactions in the EU-15 involved properties or portfolios in excess of euro 100 million ($118 million). Eight deals in the first half of 2005 exceeded euro 500 million ($591 million), two more than in the first half of 2004.

Non-EU investors made almost 50% of acquisitions in the first half of 2005, compared with 33% in 2004, reflecting growing investor interest from the Middle East and Far East. Germany has seen a large number of public housing acquisitions by US investors.

"Non-German investors, who have shown little interest in German real estate in previous years, now account for a significant proportion of deals," says Nick Axford, head of Europe, Middle East and Africa research at CBRE. "Foreign interest has grown as yields have increased relative to other European markets."

Instant Insights /

REIT Pays $250M for Italian Portfolio

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