Bouwinvest commits €100m to Hines Pan-European Core Fund

Dutch real estate investment manager Bouwinvest REIM has committed €100m to the Hines Pan-European Core Fund, extending its allocation to core European retail and office markets.

The €8.5bn investor said it wanted to benefit from resurgent growth in European economies, adding that the commitment tallied with its strategy to increase international investments from 35% to 40%.

Stephen Tross, Bouwinvest’s director of international investments, said his company was aiming for “greater risk diversification across geographies and cycles, while optimising… returns”.

“The investment with Hines reflects our confidence that their investment philosophy is closely aligned with our values and that they can achieve our core-style return targets,” he added.

The Hines Pan-European Core Fund (PECF) comprises approximately €860m of assets under management “allocated to the strongest, most mature and transparent real estatemarkets and cities in Europe”, according to Bouwinvest.

It said the PECF had a low risk profile and provided a stable net dividend return of 4-4.5%.

The fund focuses on prime office and high street retail assets, with its portfolio comprising properties in Berlin, Frankfurt, Düsseldorf, Hamburg, Stuttgart, Paris, Dublin, London, Edinburgh, Barcelona, Madrid, Florence, Milan, and Copenhagen.

Hines was ranked in the Top 10 of IPE Real Estate’s Top 100 Investment Managers Survey of last year.

Bouwinvest said it had also secured a seat on the fund’s advisory board, allowing it to represent the interests of its parent investor, the €54bn pension fund for the building industry, BpfBouw.

Earlier this week, asset manager Fidelity warned of a potential bubble in the top end of the property market in the euro-zone.

Dick van Hal, Bouwinvest’s CEO, said he didn’t share Fidelity’s sombre forecast for the moment.

“We still see opportunities for attractive transactions in Europe,” he said. “However, we are cautious and assess the risk-return profile of every single investment.”

Van Hal acknowledged that the risks would increase if retail returns fell further: “In that case, spreads between risk-free returns and the yields of retail investments will narrow.”

In his opinion, a further interest rate rise would also increase the risk of a bubble.

The CEO said he didn’t agree with Fidelity’s suggestion that investors should refocus on investments in non-prime real estate, arguing that core property was located in areas of scarcity.

“Therefore, core property will retain its value for longer,” he said.

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