Swiss institutional investor BVK is bring the management of its real estate investments in-house as part of a wider restructure.
The CHF28bn (€23bn) pension fund for the canton of Zurich is changing into an independent foundation and has to rearrange its cooperation with external partners, including its real estate manager Kantag Liegenschaften.
The part of Kantag that is responsible for managing BVK’s properties in the region will be subsumed into BVK’s organisation in October, increasing full-time staff from 70 to 120.
Hansjörg Felix, currently managing director at Kantag, will join BVK’s board of managers.
In its transition from a cantonal authority to an independent foundation, the pension fund has new compliance rules regarding any business with “associated companies”.
While Kantag has been operating as an independent manager for public real estate holdings by the canton and BVK since 1999, the former cantonal department could still be seen as a close associate of the pension fund in that respect.
Last year, BVK did not increase its directly held real estate portfolio due to competition and “high prices” in its domestic market. Instead, it concentrated on creating value from its existing portfolio, including project developments.
BVK’s CHF4.5bn direct Swiss real estate porfoliio, which accounts for 19% of its total assets, returned 6.3% last year.
Foreign real estate only amounted to CHF517m (2% of the total portfolio) at the end of 2013, spread between collective investment foundation AFIAA and active fund manager LGT Capital Partners.