FINLAND - The Finnish Local Government Pensions Institution (LGPI) has invested $75m (€48m) into an Asian real estate fund of funds managed by Aberdeen Property Investors (API).
API - which recently won a property mandate for the Bank of Finland pension scheme -said at the latest closing of the AIPP Asia Select Fund on April 182008, the LGPI had invested $75m of the $80m received by the fund. (See earlier IPE Real Estate story: Bank of Finland scheme awards real estate mandate)
The closed-ended vehicle, which lasts 10 years and now has equity commitments totalling $158m, invests in property funds across the AsiaPacific region, with a net target internal rate of return (IRR) of 13%-17% net.
The fund, a "follow-up" to API's first Asian fund of funds AIPP Asia, currently holds investments worth $74m in two country-specific funds in Japan and Malaysia and in one pan-Asian fund.
Arto Tuunanen, real estate portfolio manager at LGPI, said: "Asia is expected to remain an important driver of global economic growth in the future with projected growth rates exceeding those predicted for North America and Europe.
"As a result, the real estate market in Asia will benefit from this scenario and we feel that Asia should be part of any long-term investment strategy."
At the end of 2007, the €24.3bn LGPI had approximately 8% of its portfolio in real estate, which consisted primarily of direct investments in domestic real estate and real estate shares, although since 2004 it has diversified into real estate funds both in Finland and abroad.
As a result, out of the €1.8bn real estate portfolio, the total amount of investment commitments in both Finnish and foreign real estate funds reached €573m at the end of 2007.