Union Investment Real Estate accelerated its global expansion in 2016 by investing a record €1.3 bn in the US, its 'second pillar' market alongside Europe.
The Hamburg-based fund manager said in a statement that its investment teams, headed by Frank Billand and Martin Brühl, carried out 39 acquisitions and 20 disposals totalling €4.6 bn across the entire business last year.
Beating the 2015 acquisition volume by €500 mln, Union Investment deployed €4 bn to purchase properties, with €1.3 bn - or 35% of the 2016 total - being invested in US markets. Six acquisitions in the hotel and retail segments, accounting for around €570 mln of investment, were the major contribution to the record transaction volume in America.
In addition to entering two further US hotel markets, in 2016 Union Investment gained exposure to the retail markets of New York City, Philadelphia and San Francisco via a joint venture. 'The US real estate markets are the second pillar of our business alongside Europe. What has long been true with regard to the office sector now also applies to our successful investments in the hotel and retail segments,' said Reinhard Kutscher, chairman of Union Investment Real Estate.
Over the past three years, Union Investment has invested some €5.3 bn in new properties in overseas markets (North and Central America, Asia and Australia). As a result, the share of non-European real estate as a proportion of total property assets held by Union Investment doubled from 11% to a current level of 21% during this period.
Union Investment entered the New York City hotel market on 23 December last year by acquiring the 317-room Courtyard by Marriott World Trade Center (pictured) which opens in Manhattan before the end of Q1 this year. The hotel was acquired on behalf of Union Investment's open-ended real estate fund Unilmmo: Global for in excess of €200 mln.
Portfolio age profile
The sales programme for 2016 was down on the previous year at €610 mln, with the prior year's figures having been boosted by the Aqua pan-European office portfolio sale. Union Investment has now divested commercial properties with a total value in excess of €3 bn and an average age of 15.2 years over the past three years.
During the same period, acquisitions worth some €10 bn and with an average age of 4.4 years were made for the company's retail and special funds. The newly acquired properties are eleven years younger than the sales portfolio, the fund manager said. The high proportion of project acquisitions is a major factor in this. Since 2014, Union Investment has invested around €2.3 bn in acquiring development projects, with the past year accounting for more than half of that amount (about €1.2 bn).
Real estate fund assets actively managed by Union Investment rose over the course of 2016 from €28.5 bn to €31.8 bn.
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