Bayerische Versorgungskammer (BVK), the €69 billion German pension fund, has awarded a €250 million separate account to Universal-Investment, the Frankfurt-based investment manager, and GPEP, the Frankfurt-based asset manager.
The separate account, BVK-Deutschland I-Immobilienfonds, is expected to be used to invest in supermarkets and retail centers throughout Germany, across the full range of risk strategies.
The three organizations would not comment on return expectations for the mandate, but a person close to the deal said the account would be targeting core, value-add and opportunistic assets. Typically core investments are expected to produce returns in the single digit percentages, value-added investments produce returns in the high teens, while opportunistic returns tend to be above 20 percent.
PERE understands the mandate does not have a lifespan or a ceiling investment figure but, depending on performance, could be topped up with further capital.
Universal-Investment and GPEP have already secured the first acquisition on behalf of BVK, an off-market portfolio consisting of 46 retail centers and supermarkets. In total, the portfolio offers more than 1.1 million square feet of retail space. The properties are predominantly located at established retail sites in 10 German states, including Bavaria, Lower Saxony, Saxony and Saxony-Anhalt. The portfolio is 93 percent leased with anchor tenants including Netto and REWE Group and annual rent amounts to €8.8 million.
A spokeswoman for GPEP, which specializes in asset managing retail properties, said it planned to add value to the portfolio’s assets through lease restructuring and targeted investment.
The seller of the 46-strong portfolio was not disclosed by any of the firms involved in the deal, neither was the price.
BVK and Universal-Investment both declined to comment on the deal, but GPEP managing director Jochen Friedrich said that institutional investors have shown an increased appetite for German retail.
“The joint inception of the BVK-Deutschland I-Immobilienfonds – FMZ fund is further proof that our experienced team is more than capable of meeting BVK’s investment criteria,” added Friedrich.
BVK has shared recent history with Universal-Investment. Last October it awarded the investment manager a €3.6 billion mandate to invest in European and Asian-Pacific real estate.
The German pension fund has also inked a number of other specialized mandates, since introducing a new separate account 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 those 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 firm CapMan to invest €400 million in Nordic residential markets. While in January last year, 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.