ABP, Keva in property private equity move
REAL ESTATE - Finnish local government pension fund Keva and ABP, Europe's largest pension fund, were among eight initial investors in a pan-European real estate private equity fund launched last week by Spanish property group Neinver.
Collectively, institutions contributed €480m in equity to the IRUS European Retail Property Fund, which will acquire retail outlet centres already owned by Neinver, warehouses and standalone retail assets. The fund has a target size of €1.4bn.
The fund's start-up portfolio will comprise all six of Neinver's existing retail outlets in Spain, Portugal, Italy and Poland. The fund will acquire the firm's pipeline over a four-year investment period, possibly with additional third-party acquisitions.
Because they tend to be long-term investors, liquidity is less of an issue for pension funds than it is for other institutional investors - making them obvious targets as potential private equity investors.
"As long-term investors, we don't need liquidity," said Erkki Markkola, real estate chief investment officer at Keva. "We hold assets for 20-30 years, so it isn't an issue for us."
Markkola identified as the primary appeal returns comparable to direct real estate investment. "We want to diversify outside Finland and unlisted property funds were the best way to do it," he said. "We don't have the global expertise to invest directly. Of course, we could invest in listed property or REITs but so far we've chosen unlisted property instead because the returns are related to those for direct investment."
The other investors were Dutch insurance firm Achmea, Arlington, Sparinvest, Schroders, Neinver, CB Richard Ellis and Merchant Holding.