Scandinavia - Scandinavian funds still consider non-listed real estate an attractive investment opportunity in the medium to long-term, according to a survey by Lymos BV Real Estate Capital Advisors.
Of the 44 pension funds surveyed in Norway, Sweden, Denmark, Iceland and Finland, 53% said they would be investing in non-listed real estate in the coming years and 15% said they had already increased their exposure to the sector and met their targets. The remaining 31% either plan to invest in direct real estate or no not have any real estate assets in their portfolios.
Mariëtte Meulman, managing director of Lymos BV Real Estate Capital Advisors, said: "We believe with all the money dampened as a consequence of the current crisis, non-listed real estate has shown good performances compared to other classes in the portfolio. Overall, pension funds focus on the long-term. They move well-considered and make their investments based on in-depth analysis. Most of the pension funds believe that investing in non-listed real estate will help them to recover in the future."
In the 2008 study, 12% of respondents said they planned to increase their allocations to non-listed real estate over five years to achieve greater diversification, however, the financial turmoil has led to some pension funds to put their plans on hold.
According to the report, pension funds have started managing non-listed real estate funds more actively compared to last year, and regularly monitoring returns as a result of the financial crisis. The latest survey showed 65% of respondents said they were active shareholders and 35% said they were passive.
"They will monitor their holdings more intensively and at the same time they are developing tools to improve the analysis of the funds they have invested in," Meulman told IPE Real Estate.
Of the respondents questioned, however, 70% do not currently perform a financial hold/sell analysis and 42% do not do a strategic hold/sell analysis, although this is expected to change.
"Non-listed real estate is still not a very mature industry. Until a couple of years ago many pension funds did not invest in non-listed RE and private equity. Exit strategies were not on their radar screen as they were still building a non-listed real estate portfolio and the emphasis was on the acquisition side," she said.
"Recently they changed this strategy and now with the expected higher amounts invested every year they will feel an increased need to perform a strategic hold/sell analysis as well as financial hold/sell analysis," added Meulman.
Most of the pension funds questioned said they did not plan on prematurely ending their investments in closed-ended non-listed real estate funds.
The survey, carried out between August and December last year, is designed to give pension funds an insight into how the non-listed real estate sector might develop.
The 44 pension funds surveyed were chosen from the September 2006 supplement of Investment and Pensions Europe's Top 1000 European pension funds. Only those with at least €500m in assets under management were been selected.
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