EUROPE - Unicredit pension fund has hired a subsidiary of insurer Generali to manage €500m of its €770m real estate portfolio.
The €2.14bn Italian pension scheme at the end of last year announced that it was seeking “an appropriate solution” to set up and manage a vehicle for a significant percentage of its property assets.
The scheme will continue to manage its €220m residential portfolio directly.
The decision announced today follows a KPMG-advised tender involving six potential managers. Among the unsuccessful bidders was Idea Fimit, an Italian operation set up by public-sector pension scheme FIMIT and private sector firm First Atlantic.
Generali said it would pursue “long-term management policies, consistent with the needs of an investor in the pension field”.
A spokeswoman for Generali said the deal represented a breakthrough for the insurer’s plan to build its third-party property fund management business - which will begin full operations in July this year - from €28bn in assets to €36bn by 2016.
“There are new opportunities in the Italian real estate market, and we’re seeking to exploit them,” she said.
“There is an increasing trend for pension funds to outsource real estate because they need specific expertise to manage a portfolio.
“If they don’t have it in-house, they will evaluate valued players like Generali with dedicated real estate teams and the expertise to do it.”
Although it will hold on to in-house management of its housing portfolio, Unicredit’s decision to outsource the management of its real estate allocation is part of a broader shift within the Italian pension-fund market.
In addition to the significant cost and complexity associated with direct investment in real estate, Italy has seen the emergence of an alternative in central bank-regulated closed-end real estate funds.