Do not be surprised to see Algemene Pensioen Groep (APG), the manager of approximately €430 billion in pension assets on behalf of 4.5 million Dutch employees, expand its non-listed real estate team in Asia next year. The Hong Kong-based team currently consists of five professionals led by Sachin Doshi, who was promoted to the top job following the departure of previous head Daan van Aert in October.
Chief among Doshi’s objectives will be to select and engage with operating partners for long-term joint venture or club investments within target sectors and geographies. In doing so, he continues a strategy adopted by APG’s non-listed real estate team globally since the onset of the global financial crisis and aimed at reversing a majority exposure to multi-strategy commingled fund investments. Going forward, such investments will be the exception rather than the norm.
To make the switch effectively, Doshi recognizes that APG is likely to need a deeper bench than the five professionals it currently has. “We have no specific requirement, but clearly this way of investing is more hands-on,” he clarified in his first interview since becoming Asia head. “We also have a more sizeable portfolio in the region now so, to the extent we need to add people, we will do that selectively.”
APG currently is invested in approximately €7 billion of real estate, both private and listed, in Asia, accounting for about one quarter of the pension administrator’s total real estate assets under management. Within that total are approximately eight direct investment partnerships, structured either as clubs or joint ventures, with managers that include Goodman Group, LaSalle Investment Management and Godrej Properties.
Though smaller in terms of capital value, a meaningful proportion of APG’s investments in private real estate in Asia remains in traditional commingled funds. “Some are still live, although a number are nearing the end of their natural term,” Doshi said. “Nonetheless, there is still more invested in the commingled bucket than the JV or club bucket.”
While commingled funds will not be removed from the agenda entirely – a commitment was made to Singapore-based Alpha Investment Partners’ Alpha Asia Macro Trends Fund II earlier this year – Doshi said APG is keen to position itself within target markets through long-term partnerships that can match its long-term liabilities with stable income.
One priority is China, where the pension administrator already is committed to a partnership with listed developer China Overseas Land and Investment and state-owned Industrial and Commercial Bank of China as well as another venture focused on car parks with state-owned conglomerate China Resources Capital. With those sectors accounted for, APG has an appetite to form partnerships with operators in the more mainstream retail and logistics sectors as it seeks to directly tap into the country’s economic ambition for greater domestic consumption.
While the wheels have been in motion for some time in terms of APG’s non-listed real estate strategy in Asia, less predictable was Doshi’s ascent to the top job in the region in the first place. He joined APG as a senior portfolio manager from Merrill Lynch in 2011 and was promoted to director at the start of July. Within three months, he was named head of the platform.