Swiss pension funds are increasingly venturing outside their home market in search of property investments, says Sebastian Feix, the new global head of transactions at Swiss real estate investment foundation AFIAA.
After more than two years of identifying and analysing properties for Norway’s Norges Bank Real Estate Management (NBREM) in London, Sebastian Feix has moved to the Swiss Foundation for International Real Estate Investments, AFIAA, as its new global head of transactions.
Will the remit in your new role differ very much from what you did at Norges Bank?
My investment focus will change slightly, particularly with regard to the lot size of individual investments, which will be smaller. However, the overall investment approach and AFIAA’s Core/Core+ strategy do not differ all that much from NBREM’s strategy. Both AFIAA and Norges Bank Real Estate are long-term investors focusing on selected markets that provide for sustainable demographic growth and strong economic fundamentals. I hope, therefore, that I will be able to leverage my experience and existing network for the benefit of AFIAA and its investors.
What are the main priorities in your new role?
Under AFIAA’s ‘2016 +’ investment strategy introduced last year, my priority will be to continue its implementation and execution. In short, we are aiming to grow the portfolio to CHF 3 bn (€2.6 bn) over the next five years, almost double our current AUM.
Are Swiss pension funds, AFIAA’s clients, investing more in real estate and why?
We see a steadily increasing appetite among Swiss pension schemes for international real estate investments to diversify their portfolios, as available product in Switzerland is limited.
Historically, these pension funds have focussed on real estate investments inside Switzerland, however the low yield environment and the diversifying impact of adding international real estate to their portfolios have made them reconsider their approach and they are generally more open to the idea of investing abroad. Founded in 2004, AFIAA is one of the few platforms that provide Swiss pension schemes with an opportunity to invest in an already existing, strong and stable portfolio.
What kind of assets is AFIAA targeting (size, sector, risk profile) and where?
AFIAA is targeting high-quality office and retail properties in core locations across selected markets worldwide. As a long-term investor we focus on sustainable but dynamic markets in Europe, the US and Australia like New York, Sydney or London, to name but a few.
Ideally the individual lot size of an investment should be CHF 50-150 mln (€44-132 mln), although we might consider smaller or bigger investments if the business case is appealing, as we did with the recent purchase of the Kaisergalerie retail property in Hamburg which we acquired for €170 mln. We perceive ourselves as an active asset manager that aims to achieve good returns for our investors, therefore we are preferably looking for investments with unlocked potential.
Does AFIAA invest directly or indirectly?
It does both. AFIAA Global, the investment vehicle for direct investments, is AFIAA’s internal product and its assets are managed by our team out of Zurich, New York and Sydney.
AFIAA’s mandate for indirect real estate investments has been outsourced to CBREGI.
