Pension funds see potential in credit turmoil
GLOBAL - Funds that can benefit from the turmoil and dislocation rising from the credit crunch will attract institution capital in 2008, say industry experts.
A mixture fund managers, fund of fund managers and institutional investors, brought together by IPE Real Estate to discuss the results of INREV's latest Investment Intentions Survey, concluded investors are establishing funds to take advantage of the changing market conditions.
"What we see from our clients is a continuance of interest in funds that can capitalize on the present situation," said Georg Allendorf, managing director at RREEF.
Patrick Kanters, managing director, real estate, Europe and Asia Pacific at ABP Investments confirmed this was certainly the case for the Netherlands' largest pension fund.
"We have committed capital to the kind of vehicles that can more or less capitalize on the opportunities we expect will arise in the next year or so," he said.
Simon Martin, head of research and strategy at Curzon Global Partners, added his was one of a number of funds "seeking to capitalize on the dislocation and disruption that occurs as a result of the credit crunch", but was, in fact, surprised by the level of interest generated among investors.
Martin explained, in contrast, the turmoil at the start of the last decade did not produce anything like today's appetite for opportunism.
"The experience of the early 1990s was somewhat chastening," he said.
"If you were a manager trying to sell the concept of an opportunistic fund to capitalize on distress in 1991 and 1992 you didn't get an awful lot of shelf space from investors.
"But investors are clearly very switched on to the dislocation and disruption that is occurring because of the credit crunch and that those will present opportunities," he continued.
The panel was surprised corporate governance did not show up in the INREV survey as one of the most important criteria when choosing funds.
"We always give a lot of attention to governance," said Kanters.
"It is striking to see in the questionnaire that governance issues for investors were not a high priority. This will increase in my opinion".
The survey also revealed significant capital was being directed towards Asian markets, a finding which was in line with the panel's expectations.
"The interest in Asia is great," said Peter Dellsperger, head of real estate research and portfolio solutions at Credit Suisse.
"Even the mature markets [in Asia] offer better opportunities than European or American markets from a fundamental point of view. I think this is the area with most potential."
You can find out more about the INREV survey and this roundtable debate in the next edition of IPE Real Estate, published next month.
But if you have any comments you would like to add to this or any other story in the meantime, contact Julie Henderson on + 44 (0)20 7261 4602 or email firstname.lastname@example.org