The rise of the European banking crisis has led to the rise of high-risk investment opportunities for offshore investors. Indeed, a recent €85 million commitment to Aberdeen Asset Management by the Employees Retirement System (ERS) of Texas to invest in high-risk investment strategies across the Continent and the UK is a perfect example of how the appetite for European real estate has grown among American institutions.
The $23 billion Texas state pension system awarded the multi-manager mandate to Aberdeen to construct and manage a pan-European portfolio by investing in real estate funds rather than direct deals. Aberdeen will seek a broad spectrum of funds targeting all property types across continental Europe and the UK. Though it will seek opportunities that run the gamut of the risk spectrum, the global manager will put an emphasis on properties on the higher end of that spectrum.
Robert Sessa, director of real estate for ERS, said “current market volatility in Europe will provide [ERS] with attractive risk-adjusted investment opportunities. Going through a fund of funds allows us to invest in more funds than we could otherwise do, giving us increased diversification.”
According to Jon Lekander, global head of property multi-manager at Aberdeen, the mandate was part and parcel of the increased interest in Europe by US institutional investors, as such investors are attracted by market re-pricing and the ability to diversify and globalise their portfolios.
“Europe is not in the best position right now, but there are opportunities that will arise in these environs,” Lekander said. “In the last year or so, there’s been an opportunity-led approach to the European market, whereby investors are getting ready to capture these opportunities.”