Germany’s BVK puts moratorium on investment decisions

One of the biggest German institutional real estate investors, the Bavarian pension funds BVK Bayerische Versorgungskammer, has put a minimum four to six-week minimum moratorium on taking any new firm investment decisions as a result of the spreading of infection of the coronavirus throughout Europe. BVK manages about €88bn in assets under management.

In an interview with London-based media group PERE, the giant pension fund said it was effectively ‘buying time’ while efforts were being made to fight the spread of the virus. Rainer Komenda, head of real estate funds at BVK, said  “At the moment, on the investment side, people cannot calculate.” He forecast that decisions made on investments would not be made “at least for another four to six weeks before we, hopefully, have a slightly better picture.”

On asset classes, Komenda said he expects retail assets to be particularly hard to sell, citing two current BVK transactions which have been adversely impacted, one with a sharp repricing and the other seeing the buyer actually withdraw. Hotel and leisure assets will also be especially hard to conclude deals on, he said, while other segments will “definitely be slower, though perhaps not at a standstill.”

Before putting on the brakes, BVK had just concluded the acquisition of a new 42,000 sqm logistics property near to Kobe in Japan, with CBRE Global Investors and German fund service company Universal Investment acting for BVK. It also bought, on behalf of its Bayerische Ärzteversorgung occupational pension fund, a turnkey project development of 250 apartments in the Schönhof Quarter in Frankfurt am Main (near the trade fairgrounds in Bockenheim) from developer Instone, again for an undisclosed sum. The project will be completed in 2023. BVK has concluded a number of deals in 2018 with Instone for about 500 units.

On the sell side, BVK sold a mixed-use property, the 38,000 sqm Dieterich Karre in Düsseldorf, for more than €100m to privately-owned real estate investment manager Redevco, as part of Redevco’s specialist strategy to deploy €500m in the residential sector across the Netherlands, Germany, Spain and the UK over the coming years. The deal was an off-market transaction. Built in 1978 and refurbished in 2013, the asset consists of retail and 280 residential units. Redevco said it is planning a major refurbishment programme including sustainability and energy-efficiency improvements in the coming years.