SPMS, the €9bn pension fund for Dutch medical consultants, has revealed it is investing in real estate debt as part of its 10% property allocation.
CEO Jeroen Steenvoorden said the new investment category, which represents 10% of the real estate portfolio, is intended to stabilise returns and help diversify.
He said lending to property developers had become attractive since banks had become less active.
“Real estate debt is a mix of property and bonds, with a fixed interest rate,” said Steenvoorden, adding that the asset class had a favourable risk-return ratio.
He declined to provide details about expected returns, but indicated that the yield was supposed to match the overall benchmark of 6.5% for its property portfolio.
According to Steenvoorden, real estate debt mandates had been awarded to investment managers in the UK and the US.
He said that the pension fund had no concrete plans yet to increase the portfolio, adding that a decision about portfolio changes would be made as part of its ‘holistic’ real estate mandate managed by Aviva Investors.
The mandate consists largely of non-listed property investments with listed property holdings used for portfolio rebalancing, Steenvoorden said.
Last year, the pension fund for medical consultants divested several mandates for non-listed property in favour of listed real estate, in order to build up a position in retail centres in the US and Europe as well as in European industrial real estate.
Approximately €40m of re-investments were made in several real estate equities, in part with Unibail-Rodamco.
Last year, the property portfolio of SPMS yielded 18.4%.
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