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SEB Asset Management (SEB AM) has launched a new fund that invests exclusively in REITs (real estate investment trusts) in the Asia-Pacific region – SEB Asia Pacific REIT Fund. It aims to meet investors’ demands for a fund that generates high ordinary income through regular distributions, without exposure to unpredictable risks. The SEB AM Fund management team is based in Frankfurt and Singapore and is led by Thomas Körfgen, Head of Real Estate Equities, and REITs Fund Manager Julian Mittag.
The SEB Asia Pacific REIT Fund allows corporate and private investors to invest in one of the most dynamic investment regions in the world through liquid, indirect property investments that can be traded on a daily basis. “Asian REITs combine high dividend yields from ordinary income with the appeal of the Asian property market. They offer German and European investors in particular promising opportunities to expand their existing portfolio to Asia as an investment location,” said Thomas Körfgen, highlighting the Fund’s key investment features. The Fund Manager believes that distribution returns of around seven per cent gross are currently possible at portfolio level. “This provides a new attractive alternative to supplement traditionally bond-heavy portfolios, in particular for investors such as institutions, foundations, or family offices with a strong preference for high ordinary income,” he explained. In addition, the considerable size of the Asian REIT market enables targeted sector and country allocation of properties.
A qualitative and quantitative screening model is used to select REITs with attractive risk/return ratios, as well as proven management and corporate governance. The Fund also uses a strict risk model that takes both property-specific data and corporate KPIs into account. “Securities are selected according to our strict risk/return model, combined with the existence of an incentive-based REIT management system that rewards the creation of added value for shareholders. Growth must be purely economically motivated and should be reflected in higher earnings per share,” noted REITs fund manager Julian Mittag.
Universal-Investment-Luxembourg S.A. acts as the fund management company. The SEB Asia Pacific REIT Fund is a Luxembourg FCP according to Part I of the Law of 17 December 2010 and is UCITS-compliant.
Growing Asia-Pacific REIT market
The Asia-Pacific REIT market is currently the second largest in the world. The Asian commercial property markets already outstrip Western Europe and North America in terms of size. Real estate transaction volumes for Asian REITs grew by approximately 19 per cent to a record USD 16 billion in 2011. A large number of Asian REITs are currently preparing to IPO and are expected to list within a year. “The signs point to growth,” concludes Körfgen. “REITs will become an integral part of Asian real estate allocation for a large number of investors in the near future”.