GERMANY – ATP, the 31.2 billion euro Danish supplementary pensions scheme, says it will increase its allocation to property by the end of 2005 and move away from domestic dominated property.
Speaking at the IPD conference in Wiesbaden, Arbejdsmarkedets Tillægspension’s managing director Lars Frederiksen said that at present 1.456 billion euros of the entire fund is invested in property with an 89/11 domestic/international split.
By the end of 2005 this figure should be 1.825 billion euros - with a 60/40 domestic/international spilt.
Discussing the pros and cons of direct property investment, unlisted real estate investment vehicles and listed property shares, Frederiksen said: “There is no one right way of obtaining property exposure over Europe for an institutional investor.
“The strategy should depend on factors such as size of mandate, liquidity, desire for an active role, risk/return profile, tax views and investment philosophy.”
ATP has chosen to invest in unlisted real estate investment vehicles because of the tax-efficiency involved and because the fund does not require liquidity.
Frederiksen highlighted some of the disadvantages of investing in unlisted real estate investment vehicles: low liquidity, lack of transparency and standardisation, and no pan-European benchmark.
These are among the issues being tackled by the new European Association for Investors in Non-listed Real Estate Vehicles, or INREV, that was launched yesterday. It has been formed in response to the growing unlisted real estate vehicle market and its inefficiencies.
Of the 1.4 trillion euros invested in property by European institutional investors, unlisted real estate investment vehicles are the second largest product, following direct property – the significant leader. The unlisted real estate investment vehicle market has grown considerably since 1997 and - as Frederiksen says: “to be sure investors like this product”.