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German pension fund BVV to ramp up real estate exposure

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GLOBAL - German pension fund BVV is establishing an investment vehicle to gain access to global real estate markets, including opportunistic and emerging market strategies.

The €23bn Pensionskasse for the German banking industry is keen to increase its exposure to international markets and is working out the best structure for the task.

Board member Rainer Jakubowski told IP Real Estate that the pension fund was "creating an investment vehicle that will allow us to make opportunistic investments internationally", although he was unable to disclose its structure.

BVV Pensionskasse has a strategic allocation to real estate of 8%, but currently its weighting is closer to 6.5%.

Jakubowksi said the pension fund would attempt to "increase its exposure if the investment opportunities are good".

Most of BVV's real estate portfolio is currently located in euro-zone markets, and Jakubowski said the pension fund would seek to invest more risk capital in international opportunistic investments.

The intention is for BVV's real estate investments to follow the path of its equities and fixed income investments, whereby a growing proportion of the portfolio is allocated to emerging markets.

Jakubowski said he did not see many investment opportunities in Europe, as "we are talking about a tarnished region here".

He added: "[When] looking at growth potential over the next years, we are looking beyond Europe's borders."

"These countries' debt situation is better than that of European countries - their demographic structure is better, and, very often, they offer structural advantages like commodities."

Emerging markets are not "hyped-out" yet, he aded, because "the region consists of a number of countries offering a lot of investment opportunities that have matured in recent years".

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