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New funds highlight expertise in providing customised solutions for institutional investors
SEB Asset Management has expanded its offering for institutional investors and high net worth individuals with two new Asian real estate funds. SEB Asian Property II and SEB Asia REI give investors the opportunity to invest in pan-Asian real estate portfolios, while benefiting from the expertise and experience of an established asset manager in the region.
SEB Asset Management has an eight-strong team in Singapore and has already successfully established a special fund under Luxembourg law focusing on Asian real estate, SEB Asian Property Fund. The transaction volume generated by Asian real estate since 2006 amounts to the equivalent of more than EUR 2.2 billion.
SEB Asset Management is building on this strong foundation and taking account of investors’ differing requirements with two new real estate funds. Investors have shown great interest in the two vehicles, with EUR 100 million in funds already firmly committed. The total investment volume for each fund is up to EUR 1.2 billion, with a debt ratio of 50 percent in each case.
SEB Asia REI pursues a core/core plus strategy with no restriction on duration. The average target return (BVI) is eight percent per year; an average annual distribution of five percent is planned.
The Fund is particularly suited to German institutional investors that are subject to the Versicherungsaufsichtsgesetz (VAG – German Insurance Supervision Act), as the investment counts towards the real estate quota for restricted assets. Foreign entities that are subject to similar regulations are also core target investors. “SEB Asia REI gives institutional investors the opportunity to share in the performance of the Asia-Pacific real estate markets through the familiar structure of a special fund under German law,” explains Siegfried A. Cofalka, the SEB Asset Management AG Managing Board member responsible for the institutional real estate business. The minimum investment amount is EUR 20 million.
The Fund makes long-term, cash flow-oriented investments in office, retail, logistics and residential properties. It primarily acquires existing fully-leased properties, but it can also invest in development projects via forward deals, with the Fund only acquiring ownership of the property once it has been completed and leased. Geographically, the portfolio allocation is focused on China, Japan, Singapore and South Korea.
SEB Asian Property II pursues a core plus/value added strategy. The Fund aims to generate an IRR of 12 percent per year over a duration of eight years through active asset management and well-timed, targeted purchases and sales. In addition to private banks, asset managers, family offices and foundations, the Fund is geared towards international investors, in particular. The minimum investment amount for the Fund is EUR 15 million.
The investment focus is on office, retail, industrial and residential properties in China, Japan and selected locations in Singapore and South Korea. The allocation to development projects is limited to a maximum of 40 percent.
Economic powerhouse with growth potential
“Not only is the Asia Pacific region the world’s fastest-growing region and likely to represent a larger proportion of global economic output than Western Europe and North America together by the start of the next decade,” says Choy-Soon Chua, Managing Director responsible for real estate investment at SEB Asset Management, “the mix of mature markets like Japan or Singapore and emerging economies such as China also presents a large number of investment opportunities.”
Ongoing high population growth, progressive urbanisation and increasing affluence is pushing up demand for residential and retail properties in many Asian countries. However, supply is restricted in some submarkets, increasing the risk of price bubbles and their reversals. “This means that extensive market expertise and a strong foothold in the market are particularly crucial for successful investment in Asia,” says Choy-Soon Chua. “We offer investors both.”