The Employees Provident Fund of Malaysia (EPF) has doubled its original equity commitment to its German logistics joint venture with Sydney-based developer Goodman Group, bringing the total of its first continental European investment to €500 million, according to Goodman’s year-end results.
The partnership, called KWASA Goodman Germany (KGG), is held on a 70:30 basis with EPF holding the larger share. It is mandated to buy completed logistics properties in Germany and is seeking core-like returns overall. In July of last year, it was first reported that EPF would be committing a total €250 million to the venture, while spending its remaining €250 million on office assets.
As of now, the partnership has acquired assets totaling €213 million from Goodman’s balance sheet and its €550 million Goodman European Logistics Fund.
The MYR554 billion (€123 billion; $169 billion) EPF has made several real estate investments in the UK, including being part of the winning consortium of the £400 million (€486 million; $669 million) Battersea Power Station in July 2012. However, PERE understands that KGG is EPF’s first real estate foray into continental Europe.
KGG is an open-ended partnership, and EPF is expected to commit more capital to the partnership when needed. It is also EPF’s second joint venture with Goodman, as the pension fund first established A$400 million (€259 million; $357 million) JV with Goodman in Australia in June 2012. That JV, however, operates more like a trust fund, according to the Goodman website.
Now that EPF has invested in Germany, it is understood to have begun looking at other opportunities in European countries including France and Spain. It is unclear, however, which sector of real estate the pension will choose to start out in. It is understood that EPF usually prefers entering into the office sector, but if yields in certain countries are compressed, it will begin looking at alternate sectors such as logistics.
Last year, EPF raised its target allocation to real estate globally to 6 percent from 4 percent, but it is thought that the pension’s current allocation remains closer to 4 percent as of now. In the new allocation, 4 percent is reserved for international real estate, while 2 percent is slated for domestic and regional ASEAN real estate investment.