Bouwinvest makes US direct RE push

The Dutch pension fund aims to invest €1.5 billion in North America by 2020.

Dutch pension fund manager Bouwinvest is investing through a joint venture in a pair of multifamily properties as part of its push to make more direct investments in the US.

The JV between Bouwinvest and private equity real estate firm MacFarlane Partners acquired a high-rise apartment project in Los Angeles that is under construction and a partial equity interest in a Williamsburg, New York multifamily building worth an estimated $750 million total last week. MacFarlane did not disclose how much the JV paid to acquire the assets. Both assets were previously part of MacFarlane’s US real estate development project-focused Urban Real Estate Fund III, which closed in 2008.

The pension fund manager is striving to make more direct real estate investments in the US, particularly in the multifamily sector, Bouwinvest director of North American investments Gijs Plantinga told PERE. He added that it feels more confident with direct investments now that it has worked on several deals and has gained experience within the US. Bouwinvest

“Now we feel more comfortable doing joint venture-type investments,” Plantinga said. “We feel comfortable teaming up with other partners, especially specialists in the sector, if we feel we can have a good property or good portfolio at hand.”

Bouwinvest is looking to diversify its holdings, aiming to increase its allocation in North America to €1.5 billion by 2020, up from €1.1 billion currently, according to a press release. Around 97 percent of that capital will be invested in the US, Plantinga said.

The pension fund manager’s direct real estate push in the US comes at a time when it is also looking to increase the share of international real estate assets in its total portfolio from about 30 percent currently to 40 percent.

Helping to drive Bouwinvest’s overseas investment activity is its oldest client – bpfBOUW, a Dutch pension fund for construction workers that is seeking to expand internationally, Plantinga said. By 2021, bpfBouw plans to increase total real estate investments internationally and domestically to €12 billion from €9.4 billion.

Bouwinvest currently holds €3 billion in international real estate assets and expects to hit €4.5 billion in 2020. Including its domestic holdings, it had €10.5 billion in real estate AUM as of June 30 and expects to hit €15 billion by 2021.

Bouwinvest partnered with MacFarlane because of the firm’s local expertise in the US multifamily market and the existing relationship between the groups, Plantinga said. The pension fund manager previously invested an undisclosed amount in MacFarlane’s Urban Real Estate Fund III, according to a press release.

The Los Angeles high-rise project just acquired by the Bouwinvest-MacFarlane JV, which is still being developed by MacFarlane, will have 347 apartment units and 5,300 square feet of retail occupancy when it is completed in the first half of 2019.

For the Williamsburg apartment tower, the JV will share equity with AIG Global Real Estate and New York-based development firm Douglaston Development, which constructed the property alongside MacFarlane previously. The project started construction in 2014 and was completed in 2018. Bouwinvest said the equity split for the asset was complicated and declined to provide further details.

In the past, MacFarlane typically sold properties from its fund to third parties. However, the transaction with Bouwinvest marks the first time that the firm has formed a JV to hold onto existing assets in a fund, according to MacFarlane Partners chief executive officer Victor MacFarlane. The real estate investment firm is hoping to pursue similar deals with both Bouwinvest and its other investors to keep ownership of select assets that were in Urban Real Estate Fund III. However, MacFarlane will also continue to have the option of selling assets in the fund to third parties that may outbid existing investors.

Bouwinvest has also struck up partnerships with other US firms. In May, it allocated $100 million to Tishman Speyer’s The Spiral tower project in New York’s Hudson Yards neighborhood, joining a dozen other institutional and individual investors. Chinese conglomerate HNA Group is also part of the deal, according to data provider Real Capital Analytics. The $3.7 billion office tower project started construction in June. When completed, it will stand at 1,005-feet-tall, have 65 floors and encompass 2.85 million square feet in total – 25,000 of which will be allocated for retail space. Biopharmaceutical company Pfizer is set to be an anchor tenant, according to a press release.

Bouwinvest, founded in 1952, is a core and core-plus investor that invests on behalf of pension fund clients.

MacFarlane launched its urban real estate program in 1996 and has invested $13 billion into properties over the last 22 years. It did not disclose AUM. The firm invests in urban properties and high-density suburban assets within the US, as well as emerging real estate companies.