Interview: Sober and selective

A large part of the €2.4 bn war chest Union Investment intends to deploy in 2013 will be used to buy development projects

Despite splurging €2.5 bn on European real estate in 2012 - earning it a place in PropertyEU’s ranking of top five dealmakers - Union Investment Real Estate regards itself as a ‘conservative’ investor.

An interview with Frank Billand (Chief Investment Officer & Member of the Management Board of Union Investment Real Estate) and Reinhard Kutscher (Chairman of Management Board of Union Investment Real Estate)

‘All the funds we manage are rather conservative in their strategies so we have to be very careful in what we do on the investment side,’ said Reinhard Kutscher, chairman of the Hamburg-based fund manager. But while many of its risk-averse peers are confining themselves to standing assets in the core segment, Union Investment is partial to project developments. Of
the 26 deals carried out last year, half involved developments. For 2013, the plan is to spend €2.4 bn - up 40% on the 12-year annual average investment volume of €1.7 bn. All but €500 mln will be spent in Europe with a continued focus on getting in at the project stage. Thanks to its links with a network of German regional banks, Union Investment is one of the select few managers of German open-ended funds to benefit from rising inflows of equity from retail clients. The fund manager is also predicting further growth on the institutional side of its business in 2013 after receiving €1.5 bn in binding capital commitments during 2012. This marks a 50% increase on the €1 bn in institutional commitments received in 2011. A budget hotel fund this year adds to the growing suite of niche vehicles for institutional investors.

GERMAN CORE
While clearly happy with the 2012 performance, Union Investment remains at its core very German: sober, down-to-earth and fundamentally conservative. Kutscher: ‘Of course the number of deals and overall volume don’t count for that much on their own. The result is nevertheless a good signal to the market that we are a reliable partner and that once we have signed a letter of intent we will perform.’ In an exclusive interview with PropertyEU, Kutscher and fellow board member Frank Billand said acquisitions in Europe this year would range from retail, office, logistics and hotels. Germany will remain a key market, though Union Investment is likely to also look at opportunities in other German-speaking regions, France, the Netherlands, Poland and Turkey. Outside Europe, the fund manager is keen to build up its office and logistics holdings in North America and has earmarked €170 mln for Asia.

Click on the link below for the full interview with Frank Billand and Reinhard Kutscher