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BVK hands Universal-Investment €3.6bn mandate

The deal between Germany’s biggest pension fund and the Frankfurt-based asset manager, means BVK has handed out its fifth major mandate of 2016, taking its total real estate backing this year to €5.7 bn. 

Bayerische Versorgungskammer (BVK), Germany’s biggest pension fund, is creating European and Asian-Pacific real estate investment vehicles worth a combined €3.6 billion, which will be managed by Frankfurt-based asset manager Universal-Investment.

One €1.7 billion fund will be created to focus on European residential markets, with three sub-funds covering Nordic residential, Dutch residential and a final sub-fund concentrating on student housing and micro-apartments in German-speaking countries.

A second €1.9 billion vehicle, with four sub-funds, will also be set up to look at real estate in Asia and Australia. Each of the seven sub-funds will be managed by specialist asset managers.

“This umbrella fund structure allows us on the one hand to mandate fitting and flexible real estate specialists for each sector and for each geographical segment,” said Norman Fackelmann (pictured), head of real estate investment at BVK. “On the other hand, we can include the funds into our overall allocation strategy in an efficient and transparent way.”

BVK, which manages total assets of €62 billion, plans to eventually invest the €3.6 billion using Luxemburg alternative investment fund (AIF) structures set up to separate administration from asset management.

Alexander Tannenbaum, real estate managing director at Universal investment, said the “principle of separating asset management and administration” by German investors was well established in other asset classes, such as equities, but “has now also prevailed in the real estate segment”.

BVK has inked a number of specialized mandates since introducing a new strategy last year. In 2015, the pension fund awarded mandates to CBRE Global Investors, LaSalle Investment Management and UBS Global Asset Management. The capital for all three of these is still being deployed.

In 2016, before awarding these mandates, BVK had already inked three large mandates worth a combined €2.1 billion.

Back in July, the firm handed Patrizia Immobilien, the Augsburg-based real estate investment manager, a €400 million check to create a pan-European residential property portfolio.

Just weeks earlier, the German pension fund struck a deal with long-term collaborator, Finnish private equity fund CapMan to invest €400 million in Nordic residential markets.

While in January, BVK teamed up with the European arm of Houston-based fund manager Hines to launch a €1.3 billion separate account program to invest in European high street retail.