UBS Asset Management (UBS-AM), the investment arm of Swiss banking giant UBS, has been awarded a €300 million mandate by Italian insurance firm Poste Vita to invest in core and core-plus European office assets.
UBS-AM beat off strong competition from 150 other asset managers to secure the mandate, which will see the Zurich-based firm manage and expand Post Vita’s real estate exposure.
The deal marks Post Vita’s first foray into pan-European real estate. Called the UBS-Diamond Eurozone Office (UBS-DEO) fund, the mandate is for recently developed office assets which have high occupancy, secured by long-term leases and in prime locations within the 10 to 15 largest cities in Europe. It is expected to see investments made ranging in size from €50 million to €100 million, with a target leverage of under 30 percent loan to value.
Under the terms of the arrangement, Post Vita’s initial commitment could be topped up by an extra €200 million, depending on performance.
A spokesman for the Poste Vita said the firm was diversifying its portfolio to include international real estate investments because of a low interest environment, a theme in keeping with a more general uptick in institutional interest in the asset class.
“We were early movers in Italy, establishing a dedicated platform with a strong commitment to the market,” said Marco Doglio, Poste Vita’s head of global real estate Italy. “Poste Vita is one of the leading Italian institutional investors and this appointment is a strong step forward in achieving our ambitious plans to grow our business in Italy and across Europe.”
Doglio also confirmed that Florian Kutz, former head of Nordic real estate at UBS-AM, will relocate from Frankfurt to Milan as UBS-DEO’s fund manager.
The move is the second of its kind in a matter of weeks for UBS, which also secured a mandate from Zurich Insurance worth €400 million to invest in core European real estate.
Deloitte and law firm DLA Piper advised Poste Vita, while PricewaterhouseCoopers advised UBS.
As of March 2016, UBS Asset Management has assets under management (AUM) of €574 billion. The firm’s global real estate business has AUM of €67.3 billion.