Private investments

Private investments

APG invests part of the pension capital in private investments. Why invest in non-listed companies? What returns do they offer? What is their backstory? We will go into it here.

Theme
Long-term investment
Collection Contents
4 Publications

APG investments in Australian metropolitan rental apartments launched

Published on: 17 March 2021

The joint venture that APG participates in to invest in Australian metropolitan new-build rental apartments, can start developing its first two projects. APG is founding investor for GAMV I (Greystar Australia Multifamily Venture I) and has already made a commitment of 350 million Australian dollars (214 million euros). Now that Canadian investor Ivanhoé Cambridge and Finland's Ilmarinen have also joined, the venture can invest up to 1.3 billion Australian dollars. This makes it the largest investor in this category of real estate in Australia.

 

GAMV I focuses specifically on the Australian build-to-rent sector. These are new build apartment blocks in world city centers, that have been designed and developed specifically for renters. The venture will develop it’s first two projects in central Melbourne before extending the portfolio to Sydney as well. Greystar plans to begin both of the first two projects this year, delivering 1,300 or more rental homes. As many as 5,000 dwellings could one day be held by the new venture.

 

World city centers
Graeme Torre, managing director of APG Asset Management Asia, explains why this market is so attractive: "This type of housing is already very well established in the centers of global cities outside Asia. In the United States, for example, BTR homes make up 11 percent of the total housing stock. In Australia, it's only 1 per cent. APG has been investing in the BTR sector for some time. In recent years, more and more institutional investors have become active in this market. In the United Kingdom, for example, the sector grew by 28 billion euros in the five years to 2019. APG has benefited from that popularity rise and in Asia we expect a similar development. That is why we finance the sector through partnerships in China, Japan and Australia, and investments in Greystar's operational platform in Asia.

 

We see it as simply a matter of time before the build-to-rent residential sector gains a foothold in all the key Asia-Pacific markets. So, it is no surprise to us that major investors such as Ivanhoe Cambridge and Ilmarinen have committed to the sector alongside APG in a sophisticated market such as Australia.”

 

Beyond economics

The strong conviction that APG has to this sector goes beyond just the economic attractiveness. Torre: “If we are all to have a chance of meeting climate goals, continued urbanization and more housing options are key requirements. ‘Build to rent’ is an essential asset class in meeting these requirements. This is one of the reasons why we have been actively targeting for increased exposure to the BTR-sector.”

Volgende publicatie:
“Enterprising investment is the name of the game”

“Enterprising investment is the name of the game”

Published on: 22 October 2020

As a long-term investor, how do you deal with the short-term developments in a rapidly changing world, resulting from Covid-19? How do you not get distracted by the issues of the day? Enterprising investment in real assets is the name of the game, says APG’s Ronald Wuijster, executive board member, responsible for Asset Management. This means direct investments, without intervention from financial markets. Wuijster spoke about this during the World Pension Summit, which is happening from October 19 to 23.  

 

An institutional investor like APG invests for the long term. That makes sense, because the financial obligations of a pension fund last well into the future. The advantage of this is that you have time to allow an investment to fully mature, if necessary. The returns do not have to be withdrawn from one day to the next. However, that does not mean that you can just ignore all short-term developments, especially if these are extreme developments, such as we are currently experiencing with Covid-19.

 

Big dent

Whether it concerns government bonds, shares, real estate or private equity, today’s expected returns have all fallen by about 2-3%, as compared to 2012. Wuijster: “That may sound like a modest decline, but over a period of several years, it signifies a considerable dent in invested assets. If you look at the causes of that decrease in returns in the past few years, roughly four factors emerge. Low productivity growth in companies and an increase in government, company and household debts. Those are the first two. In addition, during the past five years, the central banks have also pursued a monetary policy by rapidly buying government debt – to stimulate the economy. And the increasingly intensive search for investment that will still generate some returns, has also put further pressure on returns.”

Please note: this was the situation up until March of 2020. The outbreak of the Corona pandemic had a further accelerating effect on all four of these trends. In other words, the expected investment returns further declined, because of it.

Masks and medications

At the same time, Covid-19 is accompanied by several trends that you can take advantage of as an institutional investor, according to Wuijster. “The tendency of authorities to act with decisiveness and intervention is greater than the fear of getting into debt. This creates opportunities to invest with those authorities in projects that are aimed at softening the crisis. In addition, face-to-face meetings have rapidly decreased, which has a significant impact on retail, the office market and travel behavior. And that, in turn, provides interesting opportunities for investing in infrastructure, but also requires a re-orientation within the real estate portfolio: does it fit in optimally with these developments? What we are also seeing is that a development is occurring where particularly crucial production – masks, medications – are being ‘brought home’ again. That development, incidentally, had already started before Covid-19; the long value chains between, for example, China and Europe are seen as too vulnerable. As long as things go according to plan, it seems to work fine, but if just one little thing in the chain goes wrong, the consequences are huge.”

Offshoring

Another trend Ronald draws attention to is the boost that working remotely got from Corona. Because, once people are used to working that way, how small is the step to offshoring? Does that legal analysis really need to be done in Amsterdam, or can it also be done in Delhi? Services are becoming marketable at a furious pace, which may lead to a new globalization wave, Wuijster predicts.

The Corona age therefore brings its own investment opportunities with it, but it is also clear that as an investor, you seriously need to take into consideration the threat of a lurking financial crisis. 

 

The door remains closed

In a world in which safe assets with sufficient returns are really no longer available, “enterprising investment” is the name of the game for an institutional investor. These are direct investments, without the involvement of financial markets. And that is exactly why there are advantages for a big investor like APG. Wuijster: “Due to the scope of the invested assets and knowledge of local markets, there is access to such real assets, while the door remains closed to parties that don’t have the same large scale. That scope is also required for being able to monitor those direct investments, which is, of course, a much more labor- and knowledge-intensive process than investing in the stock market.”

 

Finger in the pie

These kinds of investments in real assets offer the opportunity to have a significant finger in the proverbial pie. Those strong governance rights are really essential for the further development of our real assets investment portfolio, as far as we are concerned. In addition, partnerships play an important role as does cost efficiency in the investment process. We must also be able to influence the sustainability and governance factors that are relevant for a specific investment,” Wuijster states.   

Volgende publicatie:
APG expands investment in South Korean logistics real estate

APG expands investment in South Korean logistics real estate

Published on: 23 April 2020

APG, Canada Pension Plan Investment Board (CPP) and ESR have entered into a strategic agreement to establish a new development joint venture with a total equity allocation of US$1 billion. The joint venture will invest in and develop industrial and warehouse logistics portfolio in the Seoul and Busan metropolitan areas, the two markets with the largest populations and highest consumer spending in South Korea.

The investment and development of a logistical warehouse in Bucheon, completed in 2018, is an example of an earlier collaboration. It is now used by tenants like Samsung, Chanel and Sisley.

 

Graeme Torre, Head of Real Estate, APG Asset Management Asia said: “Following the success of our first joint venture with ESR and CPP Investments in Korean logistics, we are delighted to be able to repeat the partnership. This will allow us to capture the next wave of growth and opportunity in a sector that even in these uncertain times, is demonstrating resilience. Throughout our global portfolio we look for investment opportunities that allow us to meet the long term return and sustainability objectives of our pension fund clients. With like-minded partners such as CPP Investments and the local execution expertise of ESR, this new venture is perfectly placed to do just that."APG, CPP Investments and ESR have agreed to initial investments in the joint venture in the amounts of US$350 million, US$450 million and US$200 million, respectively. The partners have allocation expansion options that could bring the total equity investment capacity to as much as US$2 billion over time.

 

APG provides Dutch pension funds ABP, SPW and ppf APG exposure to these Korean logistics real estate

investments.

 

Read the press release here.

Volgende publicatie:
APG sells part interest in portfolio of Iberian shopping centers

APG sells part interest in portfolio of Iberian shopping centers

Published on: 2 March 2020

As an investor of pension assets, APG has been investing since 2003 in prime shopping centers in Portugal and Spain. Together with joint venture partner Sonae Sierra, APG had a successful 50/50 partnership for many years. APG, on behalf of its pension fund clients, and Sonae Sierra have now decided to sell a 50% stake in this portfolio to Allianz and Elo. Together the four parties will form a new joint venture - Sierra Prime - to further support the development and growth of the portfolio. Allianz and Elo will pay an amount of EUR 525 million for this 50% stake.

 

“Over the last 17 years the assets have shown their strength and resilience. We are now pleased to be part of the creation of Sierra Prime, allowing us to retain exposure to these assets going forward, whilst bringing in Allianz and Elo, two respected institutional investors, as new partners to the venture. Together with Sonae Sierra, all four parties look forward to further support the development and growth of these prime assets,” said Robert-Jan Foortse, Head of APG European Property Investments.

 

The Sierra Prime portfolio includes three assets in Greater Lisbon (Centro Colombo, Centro Vasco da Gama, CascaiShopping), NorteShopping in Greater Porto, Plaza Mayor in Málaga and the recently opened McArthurGlen Designer Outlet Málaga.