MIPIM: Union to plough EUR 1.5b into real estate this year

Germany's Union Investment Real Estate is embarking on a EUR 1-1.5 bn investment drive with the aim of expanding its foothold outside its home market.

'To further improve our access to specific market segments, we plan to expand our direct presence in the larger markets,' said Karl-Joseph Hermanns-Engel, member of the management board, speaking at the MIPIM property fair in Cannes. Having already established local offices in Madrid, New York and Singapore, Union Investment Real Estate has recently expanded its presence in France with the establishment of a 12-person strong asset management team on the ground.

'We expect our presence on the ground to provide even better access to regional markets such as Lyon, Lille and Marseilles and thus also to smaller properties worth between EUR 15 and 80 mln, which we are targeting for our growing institutional portfolio,' added Hermanns-Engel.

Union Investment was one of Europe's most active property investment management companies in 2010, having transacted over EUR 2.6 bn of assets. In addition to 24 purchases worth EUR 1.6 bn, the company sold 17 properties for around EUR 1 bn. As part of its active asset management strategy, the company intends to invest between EUR 1-1.5 bn this year and will continue to consider selling opportunities as they arise, especially in the core European markets.

According to Hermanns-Engel, Union Investment also aims to increase its portfolio risk diversification when making acquisitions in the European core markets. 'Locations like Glasgow and Limoges, where we made our first purchases last year, are part of our strategy of extending the scope of our investments - particularly in the retail sector,' he said.

Retail and particularly large shopping centres accounted for some 60% of acquisitions in 2010 (roughly EUR 926 mln) and looking forward the investment manager plans to diversify its retail portfolio with the purchase of 'flourishing, established retail parks from upwards of EUR 35 mln, both inside and outside Germany'. Hermanns-Engel: 'Smaller, more fungible properties are ideally suited to achieving greater diversification of ou retail portfolio and further consolidating our holdings in countries like Italy, France and possibly Spain as well.'