Union Investment Real Estate AG is seeking to strengthen its competitive position in international real estate markets through a combination of restructuring and expanding its core activities. Unveiled at the 5th Property Summit in London, the company's growth strategy includes gradually extending its product portfolio for institutional and private investors.
The product development process has been remodelled and streamlined based on practice in the Union Investment Group's securities business to help meet rising demand for indirect property investment products. In addition, all product-related activities - portfolio strategy, fund management, marketing, and a new unit handling finance and participations - have been brought together in a new area of responsibility overseen by the Chairman of the Management Board.
As part of these changes, Union Investment Real Estate AG will now operate in the domestic and international markets via six specialised asset management units. The Asset Management Germany unit, with its regional structure, is joined by a new division dedicated to hotels which is tasked with implementing Union Investment's expansion strategy in the hotel sector worldwide. This mirrors the approach with regard to shopping centers - the corresponding asset management unit was established two years ago and is now responsible for all shopping centers worldwide. "The increasing globalization of investment markets makes the creation of specialist, dedicated asset management units essential," says Chairman of the Management Board Dr. Reinhard Kutscher.
Asset Management International as board-level portfolio
Kutscher also announced that Union Investment intends to leverage the growth potential of global markets by way of regional teams of specialists. These teams will report to Michael Montebaur, who heads up a new International unit represented at board level. The Core Markets unit will be responsible for managing property assets in the European and American core markets, while Singapore-based Asset Management Asia/Pacific handles property acquisitions, sales and liaising with property management providers in the Far East. Asset management in the growth markets of Central and Eastern Europe and in South America, where Union Investment has built up a portfolio of 16 office properties since 2005, is the responsibility of the Emerging Markets unit. "This clear separation between core markets, emerging markets and Asia/Pacific means we are ideally positioned to face the anticipated increase in global competition for attractive properties that can deliver sustained returns," explains Kutscher with regard to Union Investment's strategy of international expansion. In the medium term, Union Investment Real Estate AG intends to invest between 1.5 and 2 billion a year in foreign property markets.
Focused business model
Like with its international property assets and shopping centres, Union Investment intends to adopt the proven combination of in-house asset management teams and external service providers to manage its German properties. "Tenant management and lettings are a central part of our business model, but we will outsource the technical and commercial aspects of property management to specialist partners who share our high quality standards." Following a multi-stage selection process, negotiations are currently under way with M+W Zander D.I.B. Facility Management GmbH to act as service partner for the company's 117 German properties. The total volume of rental space to be managed externally in Germany under the new arrangements is approximately 1.45 million m².
This decision reflects Union Investment's intention to focus on its core competence in asset management in the German market as well. "A best-in-class comparison we initiated shows that structuring and managing vehicles is gaining importance in the value chains of international investment managers," adds Kutscher.
Source: Union Investment Real Estate