Well positioned for the future
A core aspect of UI 2.0 was establishing Union Investment’s long-term growth potential in the property sector. “In order to leverage the identified opportunities, some realignment was necessary,” says Dr. Reinhard Kutscher, head of the Real Estate segment. “International sourcing was one area in particular where we wanted to move up a gear. Additionally, fast decision-making, standardised processes and a stronger fund management function were all needed to make us more responsive.” By setting up a separate department for real estate asset management, headed by Volker Noack, it also proved possible to generate more value from existing holdings. All these measures were necessary in order to achieve sustainable and profitable growth in line with expectations.
An associated objective was to broaden the sourcing base to include the American and Asia-Pacific markets. “As a result of the project, we increased our acquisition capacity and thereby gained greater access to secondary markets overseas,” explains Kutscher. This not only delivered more sourcing opportunities for the international funds, it also made it easier to take advantage of the ever-shorter market cycles in the Americas and Asia-Pacific in order to dispose of properties.
Despite the amount of work involved in restructuring, and challenging market conditions, the company achieved encouraging results in 2012 even before the project was completed. It was more successful at converting cash into assets thanks to empowered fund managers, a clear strategic focus and phased implementation of an efficient investment process. In the same year, Union Investment’s assets under management in the Real Estate segment exceeded EUR 20 billion for the first time. With 31 property purchases totalling approximately EUR 2.14 billion, acquisition performance was also very good in 2013.
Union Investment extended its position as one of the most active European real estate investment managers, while also garnering awards such as the Scope Award 2012 in the Best Asset Management Real Estate category. The fact that the change process was tackled head-on also contributed to this success, from the initial effectiveness projects in February 2012 through launch of the implementation project at the beginning of June to the preparations for implementation, which ran from October. Implementation itself involved substantial organisational changes and took place at the start of 2013. “Like a newly assembled sports team, the new processes needed time to gel,” comments Dr. Kutscher. The bedding-in phase is now long since over and Union Investment is well positioned to respond flexibly and efficiently as it continues to seek growth. “Both private and institutional investors are still underweight in real estate. We can provide appropriate solutions to remedy that.”