AP1 acts as lead investor in Aberdeen secondaries fund

EUROPE – Sweden's AP1 pension buffer fund is acting as lead investor in a new European secondaries fund to be launched by Aberdeen Asset Management.

Aberdeen said it had received €151.5m of initial commitments for its new fund – Aberdeen European Secondaries Real Estate – with the SEK240bn (€27.7bn) Swedish fund as its lead investor.

The portfolio of the new fund will consist of around 15 funds with collective exposure to more than 200 properties in Europe.

Tomas Svensson, real estate portfolio manager at AP1, said: "Providing liquidity to a market where sellers far outnumber buyers, combined with the increased interest for investments beyond core in Europe, will provide us with investment opportunities with attractive risk-adjusted return."

He said this interest in properties beyond core was likely to increase over time, and that the secondary market would therefore eventually pick up.

Those funds with fundamentally good assets stood to gain from this development, he said.

"There's been a change in market sentiment, and this has to do with core being pretty much fully priced," he said.

AP1 is seeing a tight market in core in Munich, London and Paris first-hand through its own Cityhold property joint venture, he said.

Aberdeen said its property multi-manager team would construct the portfolio for the new secondaries fund, and that the lead managers would be Lars Graneld and Johan Temse.

Final close for the fund will be September 2014.

Jon Lekander, global head of property multi-manager at Aberdeen, said: "We see a growth of attractive secondaries opportunity in this part of the market as investors are becoming increasingly active in the management of their indirect property portfolios."

Typically, Aberdeen said, institutional investors put investments in property funds up for sale because of regulatory requirements, such as the introduction of Solvency II and Basel III, performance, asset allocation and other reasons.

It said there were more than 100 funds in the new fund's investment universe, with these spread across a variety of sector, single-country and regional strategies.