Daan van Daan Van Aert, APG
As institutional investors go, Netherlands-based Algemene Pensioen Groep (APG) has been one of those most active of late. Although blind pool commitments have been absent, with the last one in Asia made approximately two years ago, the pension fund manager responsible for the €231 billion Stichting Pensioenfonds ABP has been investing, and investing big, on the club structure front. 
Aert
Following its participation in the $1.4 billion acquisition of a 50 percent position in Westfield’s Stratford shopping centre in London in November, APG participated in the A$2.5 billion (€1.88 billion; $2.5 billion) joint purchase of ING Real Estate Investment Management’s Australian ING Industrial Fund. The transaction was agreed to last month and was awaiting unit-holder approval at the time of writing.
“You are seeing that most of our deals are happening through club structures,” said Daan van Aert, APG’s head of non-listed real estate for Asia. “That makes sense to us now, as we already have a large portfolio in the region,” he explained, pointing to its sizable exposure to both listed and unlisted Asia real estate securities.
APG is focused on developing long-term relationships with a small, select group of operating partners and fellow investors. It is little coincidence then, that the Canada Pension Plan Investment Board was a co-investor in both of the above-mentioned deals. 
We are trying to set up partnerships with the strongest parties in the real estate business. That enables us to focus substantial amounts of capital for the long term, as well as obtain favourable terms and conditions. The structures we favour typically involve a combination of a dedicated manager, say an operator or developer, together with two or three like-minded investors.
“We are trying to set up partnerships with the strongest parties in the real estate business,” explained Van Aert. “That enables us to focus substantial amounts of capital for the long term, as well as obtain favourable terms and conditions. The structures we favour typically involve a combination of a dedicated manager, say an operator or developer, together with two or three like-minded investors.”
That’s not to say blind pool investing is off the table. “We haven’t yet made a commitment to a blind pool fund, [but that doesn’t mean we won’t],” countered Van Aert. “After the global financial crisis, we re-considered what the best investment opportunities were. We want to invest very selectively.”
APG’s exposure to Asia real estate currently stands at approximately €4 billion, compared to €9.3 billion in Europe and €6.7 billion in the US. But that has been a steadily growing number, underlined by 2007’s opening of an office in Hong Kong. APG’s real estate team in Asia has since grown to eight staff, so subsequently its reach is growing as well.
“Around 75 percent of our exposure is based on the core markets of Asia – Australia, Japan, Hong Kong and Singapore,” Van Aert said. Having already cemented a presence in these countries, expect emerging economies to play a greater part in its strategy, he noted, offering China as one obvious target on account of its growth and diversity potential. “It’s ideal for a manager of institutional capital,” he added.
Another of its partners in the ING transaction is the China Investment Corporation (CIC). Based on van Aert’s comments, a betting man might wager that APG teams up with CIC again on something big before 2011 is out.
Clubbing in Australia
Algemene Pensioen Groep’s strategy of teaming up with a select set of partners on large ticket deals is well exemplified by its A$2.5 billion (€1.88 billion; $2.5 billion) joint capture of ING Real Estate Investment Management’s ING Industrial Fund.
In one deal, APG and partners Canada Pension Plan Investment Board (CPPIB), China Investment Corporation (CIC) and Sydney-based Goodman Group look set to acquire 60 logistics properties, the majority of which are in Australia. As of June 30, 2010, the portfolio comprised 5.1 million square feet, 96 percent of which was occupied with a weighted average lease of 4.6 years.
The partners are expected to pay the fund’s unit-holders A$0.546 per unit, reflecting a premium of 15 percent on their closing price of $0.46 on 27 October 2010 – the day before the consortium made its indicative offer. The offer has since been unanimously recommended by ING Management Limited, the ING entity previously responsible for the fund.
The special purpose vehicle used to buy the units of the fund, called GTA, aptly demonstrates what Daan van Aert described to PERE as an ideal partnership. In Goodman, it has found one of the world’s most established logistics businesses. It also is a company with a track record of managing the capital of the world’s largest investors, while operating and even developing assets. In CPPIB and CIC, APG has joined co-investors with similar beliefs in establishing select, long-term partnerships.
In this deal, APG would end up with a 25.2 percent holding in GTA, compared to CPPIB’s larger 42.5 percent, CIC’s 12.4 percent and Goodman’s 19.9 percent position.
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