Union Investment to ramp up in Americas

Hamburg-based Union Investment intends to use its €330 mln acquisition of an office tower in San Francisco last June to re-start an acquisition programme in the Americas.

Union has already been active on the vendor's side. In early February the German fund manager sold properties worth $225 mln (€166 mln). The five properties totalling 56,000 m2 and located in the capital Santiago were bought by a local property fund.

While this was the first sale ever of a single-owner office portfolio in Chile Union Investment intends to make its mark in the Americas during 2013 as a buyer rather than a vendor.

Speaking exclusively to PropertyEU, Reinhard Kutscher and Frank Billand, members of the management board, revealed Union Investment Real Estate intends to deploy €2.4 bn in 2013. Of this some €500 mln will be spent outside Europe, with the bulk (€430 mln) going to North America and Canada. Office properties and logistics assets are on the shopping list.

The US economy is slowing tentative signs of recovery and there has not been much speculative construction in recent years ensuring there isn't too much oversupply.

The main question is how a German fund manager can operate in a competitive market like the US.

Union Investment's answer was to pull off a coup last June when its open-ended fund, UniImmo, emerged ahead of major local players to acquire 555 Mission Street, an office tower in San Francisco, from developer Tishman Speyer for about €330 mln. This was Union Investment's first acquisition in the US market for four years.

Billand: 'For us this was the most competitive acquisition last year where we were really up against major players. We had three weeks for the due diligence - a real challenge, but we did it and the deal brought us back into the mind of US investors.'

Union Investment believes this ability to process and close a complex transaction quickly will help it make further headway in the market during 2013.

The fund manager is looking at office opportunities in both major and booming secondary cities in the US.

Union Investment is also looking to add to the three logistics properties it had in the US. 'It is very important to us to have a long-term lease and to be in a hub location. We don’t have a partner for logistics yet but it is too early as we are going to invest on a case-by-case basis,' Kutscher said.