GERMANY – A lack of investment opportunities in Europe has forced Germany's largest Pensionskasse BVV to open its real estate portfolio to global opportunities.
Rainer Jakubowski, a board member at the banking pension fund, told IPE: "Our real estate investments had to be cut slightly because of a lack of investment opportunities – only the residential sector has seen increases."
The BVV currently has 6% of its €23bn portfolio invested in real estate against a strategic target of 8%. Due to an unintentional reduction in the allocation, the fund will need to make some changes, Jakubowski said.
"We will be setting up global mandates to enable us to make use of every window of opportunity," he said.
"Wherever we see interesting investments – no matter the region or sector – we want to be able to participate.
"We got rid of the concept of a detailed, long-term real estate investment strategy with fixed target allocations."
Jakubowski added that the portfolio also included value-added real estate, as core had produced insufficient returns.
The new managers for these value-added funds – which will be set up as individual mandates or Spezialfonds – will be selected in-house.
They will then be integrated in a master-fund structure administered by a KAG, as the BVV wants to be able to replace the managers easily if necessary.
Jakubowski confirmed that the BVV was currently looking at managers in the euro-zone area with a global infrastructure.
"We will also be re-evaluating our current managers – it is a real watershed for us in a way," he said.
Over the medium term, the new approach will mean the BVV will "go out of the euro area", as Jakubowski does not see many windows of opportunity in Europe at the moment.
Another new theme is debt financing, a possible means of replacing the "unfortunately vanished government bond theme".
"This is a topic that fits our core business because of its long-term character, and the quality of financing has improved during the market consolidation," Jakubowski said.
But he stressed that it was unclear when the fund might start with these investments, as the current market environment made it difficult to reach target returns.
"We want to prepare so we can enter the market at an opportune moment," he said.