An Italian subsidiary of Zurich Insurance Group has awarded a €400 mln pan-European property mandate to the real estate asset management arm of Swiss-based banking group UBS.
UBS Asset Management (Italy) will primarily target core and core-plus office and retail assets across the eurozone, with a focus on Italy, for the new fund, UBS Zurich Italy Real Estate Fund (UBS-ZIREF).
The mandate was awarded by Zurich Investments Life (Italy), a fully-owned Italian subsidiary of Zurich Insurance Group, which is headquartered in the Swiss city of Zurich.
The 15-year fund will be Zurich's primary platform for real estate investment in Italy and, residually, across the eurozone. UBS-ZIREF will seek to acquire offices, retail and industrial assets with the potential to provide stable rental returns.
Italy is one of the diversification targets for Zurich in Europe. The Italian market, according to the parties, 'features investment fundamentals throughout the consolidation phase', as well as good prospects for growth in the mid-term. Investments into other eurozone markets will be made on a selective basis to increase the portfolio’s diversification characteristics.
Active in the Italian market
UBS Asset Management has been active in the Italian real estate market for 12 years and it established a dedicated platform in the country last year. 'UBS-ZIREF is the second real estate fund that our team has been competitively selected to manage on behalf of a leading insurance company and the first that has a significant focus on the Italian market,' commented Marco Doglio, head of global real estate – Italy at UBS REM.
Riccardo Cobianchi, head of real estate Southern Europe, investment management, Zurich, added, 'The establishment of this fund underlines our commitment to the Italian real estate market and the euro area. We are focusing our investments on core assets in Rome, Milan and major European cities where we are targeting the best assets in strong micro locations.'
Zurich's current asset allocation to real estate is 6%, or €11 bn, of its total group investments of €183 bn. The insurer said that it is targeting further portfolio growth in 2016 by continuing to invest directly in properties in good locations and increasing the global diversification of the real estate portfolio.
