Master real estate fund structure
Changes to the supervisory framework mean that demand for innovative solutions is constantly growing. Institutional real estate investments are being valued at shorter and shorter intervals, in direct opposition to the long-term nature of these investments. In view of this and as a result of the recent amendments to the Investmentgesetz (InvG – German Investment Act), SEB Asset Management has developed a master real estate fund structure that can be used to pool institutional investors’ entire real estate exposure. This not only centralises risk and asset management, but also allows diversification effects to be exploited. In addition, it permits consistent presentation for financial reporting purposes.
Mutual and special funds under German or Luxembourg law, real estate stocks and REITs, direct investments in individual properties and equity interests in property companies can be acquired or contributed under the master fund structure.
Benefits of the master fund structure:
- Exploitation of the pooling effect, as a single unit price is recognised in the financial statements
- Administrative expenses at investors’ accounting departments are kept to a minimum
- Accounting and investment policy effects
- Precise management of distributions allows steady current income streams
Although the results of all real estate asset classes, as well as administration, reporting and risk management are pooled together in a single fund, the individual target funds retain their original management function. Investors receive an overall performance reflecting all changes in value, enabling them to plan the long-term performance of their real estate investment better.
The merger of our real estate and securities investment companies means that SEB Asset Management is one of the few fund management companies able to implement the master fund model to the broadest possible extent. The first fund was launched in November 2008.