SEB’s investment subsidiary in Germany is hoping the dissolution of former open-ended funds will serve to strengthen its real estate institutional business, while the country’s new KAGB regulation enables it to make its first foray into closed-end funds.
SEB Investment, the local investment division of Swedish bank SEB, is one of several asset managers that had to dissolve former open-ended real estate funds (GOEFs), forced to close in the wake of the financial crisis due to liquidity problems.
Over the last year, the manager has withdrawn from every asset class apart from real estate, where it now aims to strengthen its institutional business.
SEB Investment has said it is confident the dissolution process can actually help generate new institutional business.
Christian Hanke, head of institutional real estate clients at SEB Investment, said: “Sales have been facilitated by the currently high demand for core properties, which we can satisfy.”
He pointed out that other providers had been forced to sell in more difficult markets 2-3 years ago.
“Institutional investors do not want to cut their real estate allocation, and they need returns in a low interest rate environment,” he added.
Hanke said SEB Investment was now looking to sell off assets from formerly open-ended funds in “themed packages” – such as ‘European core’, ‘US retail’ or ‘European logistics’ – and other assets to investors, possibly in club deals.
One of the markets SEB Investment is currently targeting is Austria, where several Pensionskassen are invested in SEB real estate funds, including the SEB Asia real estate fund.
“We could even imagine creating a single themed fund for Austrian institutional investors,” Hanke said.
Another area SEB Investment will explore is the closed-end fund business, which has been restructured in Germany through new KAGB regulations.
SEB Investment confirmed it included this area of business under its application for a KVG license, which all KAG must receive from German regulator Bafin as part of the new regulations, by which the country implemented the Alternative Investment Fund Managers Directive.
Hanke said offering closed-end funds would be “no problem” for SEB Investment, as it had people on its board with a background in the sector, and “the structures are in place as well”.