BVK bets €1.3bn on European high street

Germany’s biggest public pension fund manager has launched a separate account mandate with Hines to buy prime, high street retail assets across Europe.

Bayerische Versorgungskammer (BVK), Germany’s biggest public pension fund manager, has teamed up with Hines to launch a €1.3 billion separate account program to invest in European high street retail.

The Bavarian institution and the European arm of Houston-based developer-cum-fund manager Hines will focus on acquiring and managing core-plus, value-add and development retail assets in prime locations on high streets in major markets across 20 countries in Europe.

“As a business we are committed to growing our exposure to the high street retail market. It is a sector which offers attractive fundamentals, and there are good opportunities to source value-add assets in strategic locations for long-term investing,” commented Norman Fackelmann, department head of real estate investment management at BVK.

Hines has already acquired the first asset for the joint venture with the purchase of a building on Oslo’s Karl Johans gate, the premier high street in Norway. The building has been secured as a sale and leaseback from Landkreditt Bank for €52 million.

“The building in Oslo is typical of the kind we are targeting; a well located, retail anchored asset offering both income and importantly, the opportunity to use our real estate expertise to deliver enhanced capital value to the investor,” said James Robson, managing director, Hines Europe.

BVK’s commitment to Hines comes shortly after the pension fund manager awarded €700 million of separate accounts to three Asian fund managers in a bid to address an underweight allocation to the Asia Pacific region.

The move is part of greater expansion for BVK which is aiming to double its indirect real estate investments globally within four years. Rainer Komenda, BVK’s head of real estate funds told PERE back in October that BVK was on a mission to greatly increase its indirect real estate holdings which today account for about €6 billion of BVK’s overall approximately €10 billion of real estate.

Also in October, Alpha Investment Partners, the real estate investment management business of Singapore property company Keppel Land received €250 million in equity from BVK.

CBRE Global Investment Partners, the joint venture platform of Los Angeles-based CBRE Global Investors received €250 million, and Hong Kong-based Arch Capital received €200 million in equity for a range of Asian risk and return strategies.

Those mandates, which would be awarded on a non-discretionary basis, should more than double BVK’s exposure to real estate in Asia. The pension fund manager currently has about €500 million in assets in the region, thanks largely to other separate account mandates previously awarded to Chicago-based investment manager LaSalle Investment Management and Swiss investment bank UBS.