NETHERLANDS - PGGM is to expand its focus from US housing to retail, citing growing demand for residential and supply scarcity.
PGGM, which manages the €91bn Dutch healthcare scheme Stichtung Pensioenfonds Zorg en Welzijn (PFZW), acquired seven US residential portfolios in August alone - most of them through the PGGM Private Real Estate Fund (PREF), an investment vehicle for Dutch pension funds.
The acquisitions included the San Sebastian residential portfolio in California for $21.8m (€17.2m); the Point at Clark St retirement home in Chicago for $28.7m; 4550 Cherry Creek residential in Denver for $52.8m; 7166 Belmar residential in Denver for $41m; and Briar Forests Lofts residential in Houston, Texas, for $38.2m.
In addition, PGGM committed $300m of equity in three tranches for a $1.4bn portfolio of 22 multi-family communities under a co-investment agreement with Behringer Harvard.
The portfolio includes assets in Washington DC, Houston, Dallas, Portland, San Francisco and Los Angeles.
PGGM spokesmen Bram van Els said PGGM PREF had focused on multi-family in recent years because this sub-sector tended to lead economic recovery.
However, a combination of growing demand, relative scarcity of products available for investment and low interest rates have put pressure on cap rates and pushed up prices, he said.
As a result, the fund is moving into retail, especially grocery-anchored shopping centers.
However, it has ruled out office - at least in the short term.
"To make sizeable investments in office, PGGM PREF feels it to be relatively early and would like to see solid economic growth first," van Els said.
A recent report from US data firm Real Capital Analytics claimed foreign investors now accounted for around 10% of US real estate transactions, up from 7.5% in 2009.
Cross-border investment volumes rose from $1.5bn in the first quarter to $2.5bn in the second.
The report said: "Increasing foreign investment in US real estate stands out against a cyclical decline in global cross-border capital flows.
"But the current momentum is supported by investors' favourable assessments of the risk-reward trade-off in acquiring well-located and high-quality US assets."