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Europe-Based Investors in Value Added Private Real Estate Funds – January 2015

by Charles Wood

  • 27 Jan 2015
  • RE

Preqin’s Real Estate Online service currently tracks 302 Europe-based institutional investors with a preference for private real estate funds that follow a value added strategy. As can be seen in the chart below, 41% of all Europe-based investors in private real estate funds have an appetite for value added vehicles, the second most preferred fund strategy of these institutions. The average current allocation of Europe-based investors with a preference for value added funds is 9.9%, below their average target allocation of 11.5%.

Value added funds are targeted by a range of investor types located in Europe. Of these Europe-based investors targeting value added vehicles, public and private sector pension funds make up 35% and 32% respectively, while foundations account for 7%. Insurance companies represent 16%, while only 2% of these investors are endowment plans.

These Europe-based investors targeting value added funds have a strong preference for investing domestically, with 94% favouring vehicles that target properties within Europe. Thirty-nine percent of these investors seek investments that target Asian assets, and 37% favour North America-focused funds. In terms of investment type, 37% of these investors commit capital exclusively to private real estate funds, 20% invest through listed real estate and 54% invest directly in properties.

One such Europe-based investor seeking value added investments in the year ahead is Spain-based fund of funds manager Altan Capital, which plans to commit approximately €40-50mn to three or four private real estate funds in the next 12 months. It will commit to value added and opportunistic funds that are global, pan-European or pan-Asian. Netherlands-based TNO Pension Funds is also seeking to make new fund commitments in the next 12 months, and is planning to invest a total of €60-70mn across two vehicles, seeking exposure to Europe and the US via core and value added strategies.

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