EUROPE - Germany’s Bayerische Versorgungskammer (BVK) pension scheme has awarded a fund-of-funds mandate to UBS Real Estate to invest in “unmet segments” in a bid for diversification and higher yields.
The €53bn Bavarian umbrella pension scheme for self-employed professionals - including doctors, lawyers and architects - has initially committed €500m to the Munich-based fund manager for a niche prospective portfolio that will include hotels, parking and major development projects.
Tilman Hickl, managing director at UBS Real Estate Kapitalanlagegesellschaft mbH, which will manage the portfolio, said: “There is more appetite for developments since we see an overall switch to higher-yielding real estate - partly for regulatory reasons.
“The associated risks should be limited to market and letting risks and securing construction and price risks.”
UBS already manages a core portfolio invested in Europe, the US and Asia.
The focus of the new mandate will be on value-added and opportunistic investments in sub-sectors and asset types not already covered within the core portfolio.
“This completes the core portfolio and will help it to diversify further, as well as achieving higher yields,” said Hickl.
The non-discretionary mandate will also invest in BRIC-economy funds.
“We will start by selecting fund managers in Brazil and China, but we’re very cautious with regard to Eastern Europe, especially Russia,” said Hickl.
“We work closely with managers in India, but have not found the right fund yet.”
Real estate currently makes up around 11% of the Bavarian pension scheme’s overall portfolio.
Around €3.2bn of that is invested directly, and €3.2bn via global property funds.