REAL ESTATE – BVV, a €17.7bn pension fund for Germany’s financial services industry, has stepped up its investments in international property funds to compensate for continued weakness in the domestic real estate market.
In its annual report, BVV said that during 2005, it made an investment in a US property fund, while its four other European property funds acquired 14 new objects.
As a result, the pension fund said its exposure to real estate via international property funds rose to 3.3% of its €17.7bn in assets last year.
At the same time, BVV said its exposure to real estate via direct holdings in Germany declined to 1.1% of assets amid continued weakness in the domestic market.
The weakness prompted a €14.7m write-down of BVV’s direct holdings in Germany. In response, the pension fund has gradually been divesting these holdings. Last year, it completed the sale of an object in Mannheim for €670,000.
Still, there was some positive news regarding BVV’s properties in Germany. “Vacancy rates relative to the entire available space declined to 16.8% in 2005 from 19.3% in 2004,” the fund said.
Moreover, Germany’s commercial property market has begun to recover since the beginning of this year.
Going forward, BVV chief executive Rainer Jakubowski has already indicated that the fund will rely mostly on international property funds in its long-term plan to raise its real estate exposure to 5-8% of assets.
Based in Berlin, BVV insures almost 318,000 people in the financial services industry. Last year, it took in €500m in contributions from these members. The fund also has around 78,000 pensioners.
