L’Établissement de Retraite Additionnelle de la Fonction Publique (ERAFP), the French pension fund manager for 4.7 million civil servants, has selected AEW Europe for a €310 million mandate to buy French real estate. AEW Europe, which is headquartered in Paris where ERAFP also is based, announced the award at MIPIM 2013.
As PERE previously reported, ERAFP began the search for a European real estate manager 18 months ago, having taken the decision to seek significant exposure to the real estate asset class one year earlier in 2010. Indeed, in October 2011, the pension fund dipped its toes in the water by selecting AEW Europe to acquire a Paris office property on a separate account basis, stipulating that the first deal must not exceed a lot size of €40 million. Looking ahead, however, the pension plan said it would need a larger market than just Paris in which to invest, hence the need for a wider geographical focus and additional managers.
Underscoring its success, AEW said the new 10-year mandate would target primarily office and retail properties in France, with limited exposure to residential and student housing assets. Furthermore, the mandate comes with clear guidelines on sustainability and socially responsible investing (SRI) – issues that are dear to many European investors, particularly French ones.
SRI is very important to ERAFP given its governmental links. In an interview with PERE in 2010, Olivier Bonnet, socially responsible investing strategist at the pension plan, said SRI criteria was wide, encompassing social and governance policies of its real estate investing – possibly even extending to working conditions for cleaners in buildings, for example, or aspects of contractual agreements for building contractors on a real estate project. According to some sources, ERAFP originally was reluctant to invest in out-of-town retail parks in France because they encouraged greater car use.
Christian Delaire, AEW Europe’s chief executive officer, said: “We are delighted that ERAFP has entrusted us with this mandate to manage a French real estate portfolio.” The firm noted that it is a founding member of the Green Rating Alliance and a signatory to the United Nations Principles of Responsible Investment.