EUROPE NEWS ANALYSIS: “Three years of solitude”

It is enough to the scare most private equity real estate funds and capital raisers: APG Asset Management, one of the largest investors in unlisted property funds in the world, has not committed to a European commingled fund for almost three years.

Robert-Jan Foortse, head of non-listed European property investments at the Dutch pension fund manager, said the last fund commitments were made towards the end of 2007, including one to New York-based Perella Weinberg Partners, which helped the firm close its €1.2 billion Perella Weinberg Real Estate Fund I in July 2008. 

The highly-regarded pension fund manager, which manages around €20 billion of real estate, has about 150 global fund interests in total. Around 90 of those funds are in Europe, making APG arguably the most important investor in the region.

However, in an interview with PERE last month, Foortse highlighted how instead of fund commitments, the most recent APG property investments have been made through the club or partnership structure. The latest opportunity came in May when APG bought the CAP 3000 Regional Commercial Centre in Saint-Laurent du Var, in Nice, France, from retailer Galeries Lafayette for €450 million.

APG is making the acquisition alongside French property REIT Altarea and Predica, the health insurance subsidiary of Crédit Agricole Assurance. The three partners have agreed to own a one-third stake each. Altarea, of which APG owns around 8 percent, will be the asset manager.
“The deal shows that as with our partnership with [French shopping centre company] Klépierre in 2008 to buy [Swedish company] Steen & Strøm for €2.7 billion, we like to team up with companies with which we already have an investment to try to strengthen their organisation and portfolio,” said Foortse.

Asked whether APG would likely make any fresh commitments to unlisted real estate funds, Foortse said: “Yes, but I would not rule out making more investments like CAP 3000 either.”

Foortse added that “market circumstances” had prompted APG not to make any fund commitments since the start of 2008. “We stopped making commitments two and a half years ago. The last ones we made at that time were commitments to two opportunity funds when we selected managers we felt could take advantage of the opportunities the market would present in this cycle.

 “In a sense, we went back to looking at investing in the property sector again in the second half of 2009, and we became interested in selective opportunities to invest again, whether in clubs, partnerships or funds.”
In Europe, Foortse said, APG still liked retail property, albeit it was cautious about reduced consumer spending and the effect it could have on rents. The CAP 3000 shopping centre is dominant in its affluent catchment area and has refurbishment opportunities and possible chances to expand certain premises.  

For office properties, APG would look at Paris and possibly London, owing to lack of supply in the cities – but not elsewhere.

Foortse called the logistics sector “difficult” because of the limited number of sector specialists that could be suitable operating partners, while APG’s residential exposure is predominantly in the Netherlands. Foortse said APG could diversify into other North-West European counties selectively where there was a rental market.

Although APG has not made any commitments to European fund managers since 2008, the pension fund manager is in the process of pooling its real estate interests made on behalf of its largest pension fund client. Just as fellow Dutch pension fund asset manager PGGM did earlier this year, APG is allowing new pension fund clients to buy into the pooled vehicle. “This is part of the transition to having multiple clients,” explained Foortse.