NETHERLANDS - The Dutch pension fund of food giant Unilever will sell its entire Dutch direct property portfolio, and switch its real estate investment strategy to unlisted international real estate funds.
Officials said brokerage CB Richard Ellis has been commissioned to handle divestment of the portfolio worth approximately €600m.
"The market has grown so much during recent years that we have become too small to keep on managing the portfolio ourselves, and rejuvenating the existing portfolio is difficult," explained Loek Sibbing, chief executive of the scheme.
The portfolio of the pension fund - also known as Progress - consists of 52 clusters of 2,400 domestic units and 40,000 m2 of retail space, spread across the Netherlands.
According to officials at Progress, the properties will probably be offered as individual entities or as clustered holdings, while the sale will be conducted through a transparent process.
"All interested players will get the opportunity to participate in the bidding," stressed Loek Sibbing, the pension fund's director.
He said proceeds will be reinvested in indirect international real estate through external management arrangements, while the selection process of those managers will be completed this year.
Progress has managed its property portfolio internally until now.
Its Dutch property portfolio technically increased to approximately 20% of Progress' asset allocation last year because of market turmoil and its impact on other sector, Sibbing estimated.
In 2007, the scheme's real estate portfolio returned 12.1%, exceeding its benchmark by 1.5%.
At the same time, Progress has granted its workers, who switched to an average salary scheme in 2007, an indexation of 3.5%.
The inflation compensation followed Unilever's salary index, which has been guaranteed for the salary of the pension up to €70,000 until 2012.
That said, the scheme has refrained from granting indexation over this limit this year because of Progress' financial position, officials added.
The scheme has kept the workers' contribution at 0.5% of their pensionable salary up to €61,060, but has raised their contribution for the salary part over this limit from 1% to 3%.
According to Sibbing, the cover ratio of the pension fund dropped by 27% to approximately 104% during 2008, while its total assets decreased by a quarter to approximately €3bn.
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