Singapore-based fund manager Euro Asia Asset Management, in partnership with ZDR Investments Group, a major player in the European commercial real estate, has expanded its European portfolio with a S$35 million (US$25.7 million) investment in Slovenia.

The latest acquisition of three retail parks in Slovenia increases ZDR Investments’ portfolio to 66 properties valued at S$810 million. It also substantially expands its geographical diversification, which now include the Czech Republic, Slovakia, Germany, Austria, Croatia and Slovenia.

The expansion comes at a time when there is growing Singapore investors’ interest in Europe. ZDR Investments focuses on retail park properties for their sustainable income sources and economic resilience.

The retail parks, or strip malls, will be parked under the European ZDR Investments SICAV (master fund), which is the biggest fund managed by ZDR Investments and licensed by the Czech National Bank as an alternative investment Fund.

The master fund is also available to Southeast Asian investors through the Singapore-based feeder fund ZDR SG VCC under the Singapore Variable Capital Company (VCC) framework.

The three Slovenia assets has boosted the number of properties in the master fund to 41 properties with a value of nearly S$633 million. The portfolio enjoys near full occupancy rate at 99.9%. The master fund achieved an annual return of 8.75% in 2023 and an even higher return on investment of 10.44% per annum since its inception, a testament, Euro Asia says, to the benefits of long-term investments and the power of compounded returns.

Strategic value

Financed by a mix of debt borrowings (from Austria-based Raiffeisen Landesbank Kärnten bank) and equity, the acquisitions include Prevalje Retail Park, Ravne Retail Park, and Slovenj Gradec Retail Park.

For ZDR Investments, Slovenia offers strategic value given its  affluent economy and higher-than-average GDP per capita among other EU states. Having credit ratings affirmed at upper medium to high grade by rating agencies Scope Ratings and Japan Credit Rating Agency, the country was also one of the fastest EU states to recover from the Covid-19 pandemic with an unprecedented GDP growth rate of 8.2% in 2021 – one of the best performances within Europe.

“We continue to seek investment opportunities in politically and economically stable areas in Europe. The entry into the Slovenia market is a significant milestone for us both in terms of growth and geographical diversification,” says Ondřej Sychrovský, a member of ZDR Investments’ board of directors.

“Retail park properties with strong tenancy profiles and long-term rental leases remain attractive to us because of their sustainable income and economic resiliency.”

Unlike multi-storeyed shopping malls, which can be complex, challenging to navigate and more expensive to construct, retail parks are usually single-storeyed, with individual shops positioned side by side and often including free parking, ZDR Investments notes.

Retail parks offer lots of advantages for retailers, including enhanced store visibility, prime locations in desirable catchment areas and typically lower rents. They are also usually anchored with groceries or discount stores which attract a lot of shoppers, the firm adds.