Bayerische Versorgungskammer (BVK), Germany’s largest public pension fund, has awarded USAA Real Estate Company (USAA RealCo), the investment arm of financial services firm USAA, a €750 million real estate mandate to invest in core and value-add multifamily assets in the US.
The deal follows the €80 billion German pension fund’s announcement, in May last year, it was planning to add four specialized mandates focusing on the US market, including multifamily, of which this deal is the first.
USAA RealCo said it will be targeting core, build-to-core and value-add acquisitions in premium, central neighborhoods within major markets across the US. The firm said its goal is to create a portfolio of best-in-class multifamily assets delivering strong cashflow yields with significant asset appreciation potential.
As part of the deal, USAA RealCo said it would invest a 10 percent ownership interest in all future acquisitions and up to 30 percent in all future ground-up development transactions.
The mandate was also seeded with a portfolio consisting of six recently-constructed properties, which total 1,600 units and 360,000 square feet of retail space in five major US markets.
“As a business, we are committed to growing our exposure to the US market and more specifically in the multifamily segment,” said Norman Fackelmann, head of real estate investment management for BVK. “We believe the multifamily sector offers strong risk-adjusted returns over the long term, and USAA RealCo’s performance has proven to be exemplary in this segment, as the firm has consistently outperformed the NCREIF NPI Multifamily benchmark.”
“BVK is one of the world’s leading investors in real estate,” said Len O’Donnell, president and chief executive officer of USAA RealCo. “We are honored that they selected USAA RealCo to manage this significant mandate. Under the leadership of Hailey Ghalib, we have established a best-in-class, multifamily platform, and this provides a wonderful extension of that business.”
BVK has inked a number of specialized mandates since introducing a new strategy last year.
In October, the pension fund awarded Universal-Investment a €3.6 billion mandate to invest in European and Asian residential and office assets.
Earlier in 2016, BVK inked three further large mandates worth a combined €2.1 billion. Firstly in July, the firm handed Patrizia Immobilien, the Augsburg, Germany-based real estate investment manager, a €400 million check to create a pan-European residential property portfolio. Just weeks earlier, the German pension fund struck a deal with Finnish private equity fund CapMan to invest €400 million in Nordic residential markets.
In January 2016, BVK teamed up with the European arm of Houston-based fund manager Hines in launching a €1.3 billion separate account program to invest in European high street retail. In March this year, Hines made its eighth and ninth acquisitions on behalf of the BVK mandate. So far assets have been acquired in Denmark, Spain, Ireland, France and the UK.