Australian funds poised for renewed German engagement
Prior to the financial crisis Australian funds were a common sight in Europe – particularly Germany – as they roved around looking for suitable investments to meet their long-term pension return needs, with their own domestic market essentially saturated.
They’ve not gone, but they’ve been a lot quieter of late, and in Germany we’ve witnessed the retreat of several wll-known names as the battle with restructuring and refinancing underperforming portfolios acquired frequently at close to the top of many markets.
A new study by Jones Lang LaSalle’s International Capital Group forecasts that Australian pension funds will invest about €5.6bn in the European and US property markets – with their own domestic market simply unable to offer sufficient opportunities for what is by some measures the fourth-largest asset pool in the world, given Australia’s compulsory contribution system. These are set at 9% of an individual’s salary, but are set to rise further to12% of wages and salaries by 2020. About 10% of all the superannuation funds are allocated to real estate, and offshore the US and European markets have been strongly favoured so far.
Matt Richards, head of the International Capital Group in Europe at JLL, commented, “We expect the next wave of offshore Australian capital to emerge in the form of joint ventures and dedicated investment mandates with specialist European fund managers.”
One of those Australian funds which has been active in Germany has just managed a sizeable refinancing and is now revved up for further acquisitions. BGP Investment Management is a European real estate investment company with about €1.3bn in assets in German, France, the Netherlands and Denmark. It describes its mission as managing the assets acquired by its joint venture parents, the Australian REIT Babcock & Brown and the GPT Group, and was itself restructure in 2009 as an independent company with over 58,000 shareholders.
Along with its sister company BGP Asset Management, BGP Investment Management earlier this month closed a €406m CMBS refinancing for a German residential portfolio owned by itself of about 10,000 apartments. The assets are valued at about €600m, and are located in Cologne-Düsseldorf, Kiel and Berlin. The CMBS both replaces an earlier securitisation and repays a number of other bank loans, and also provides additional external funding for fresh capital expenditure. Deutsche Bank arranged the deal, with JP Morgan as co-lead manager.
According to sister company BGP Asset Management, the CMBS will serve several purposes in helping to rehabilitate the business. “The refinancing will help us to concentrate on the main locations by allowing disposal of smaller, secondary locations, as well as assisting the enhanced development of 'upside' properties via additional investment and permitting a focus on future strategic development of the BGP Investment portfolio."
The Asset Management group manages around 17,200 housing units with a market value of nearly €1bn, and offers integrated asset, property and facility management to its mainly foreign clients. This would see it ranked among the leading independent asset managers in Germany’s residential sector, behind market leaders Patrizia Immobilien and Corpus Sireo.