Our solutions for institutional investors
Responsible investment is the main fiduciary duty of an asset manager towards investors. Given the current political environment, with continued low interest rates and many real estate markets in a late stage of the cycle, a forward-looking strategy is key.
Our long-standing expertise
Union Investment has been active in the institutional real estate sector since 1977. Our customers have benefited throughout from our deep expertise and management skill in the various real estate markets. Choosing Union Investment means choosing the professionalism, outstanding client focus and strong solution-orientation of one of Europe's leading asset managers.
Assets under management in institutional real estate solutions total EUR 20.6 bilion, split between actively managed funds (around EUR 10.5 billion) and Service KVG mandates (around EUR 10.1 billion). Our 40 institutional real estate funds and other vehicles together hold 553 properties.
We provide tailored real estate product solutions and modular service packages compliant with either German or Luxembourg law, ranging from broadly diversified funds to purely administrative vehicles:
We are committed to fulfilling the varying requirements of institutional clients and leveraging our expertise to ensure that both individual client wishes and regulatory requirements are met. The starting point is always a personal discussion with the investor.
Formats & vehicles
From standard solutions to tailored structuring requirements, our product landscape comprises open-ended and closed-ended vehicles under German or Luxembourg law for one or more investors (e.g. limited partnerships (Investment KG), special AIFs, SICAV-SIFs).
Alongside traditional regulated funds, we also offer more recent structures, such as the Luxembourg Reserved Alternative Investment Fund (RAIF). As an institutional client, you benefit from our high level of structuring expertise and long experience of regulatory matters.
As one of the largest and oldest investment management companies in the real estate segment, our competitive advantage lies in the quality of our systems and processes across all areas of real estate management, fund management and risk management. This includes the following interfaces and processes:
- in real estate management: in particular the acquisition and sale process, asset management, property management and project management of development projects
- in fund management: performance management, liquidity management and planning, portfolio analysis and fund monitoring
- in risk management: ongoing checking and monitoring of a fund’s main parameters
The fund management team bears overall responsibility for fulfilling our product promise and for fund performance. To this end, alongside its operational and strategic functions, fund management also makes content decisions in conjunction with the respective departments.
The core fund management processes are:
- Determining the fund strategy and risk strategy
- Managing fund planning
- Fund and risk management
- Fund reporting (internal, legal and investor reporting)
As the so-called “deal captain”, the investment management team drives the transaction process. It is responsible for sourcing real estate in accordance with fund management requirements, it forms the interface to the individual departments and decision-making bodies and is in charge of delivering acquisitions. The following core strengths help to ensure strong execution:
- Excellent relationships with the key developers and property holders in the real estate industry, established over many years
- Deep market penetration and off-market opportunities due to market position as a substantial property holder
- As one of the most active real estate managers in the market, we have a steady deal flow
- We benefit from our reputation as a professional and reliable transaction partner
- We are valued as an active asset manager that focuses on core/core-plus investments with commercially sustainable product quality
Management of our property holdings is the responsibility of the asset management team, which is organised by country, region and sector. Asset management involves active management across the entire investment cycle of the individual property. This includes:
- Strategic alignment of the individual asset (short, medium and long term; exit strategy)
- Direct contact with the tenant through active lettings management
- Managing the external property manager (commercial building management, rent collection and invoicing)
- Managing the facility manager (technical property management, caretaker services, managing building services maintenance)
Risk management is divided for organisational purposes into risk management and risk monitoring. Risk management is handled by fund management and risk monitoring by a dedicated real estate risk monitoring unit. The latter is independent of risk management, thereby ensuring the required legal separation of the two functions.
The Union Investment Group's real estate risk monitoring unit brings together all risk monitoring tasks related to the real estate process. There is a special focus on meeting the requirements of institutional investors. This comprises comprehensive checking of legal and contractual investment limits, an early warning system specific to each fund, sophisticated risk quantification techniques for the various risk types and their aggregation, and finally the carrying out of stress tests. This risk analysis is included in the regular risk reports for fund management. In addition, the real estate risk monitoring unit also determines the necessary risk metrics for institutional investors, especially for regulatory MaRisk reporting by investors in the banking sector.
Our research team can draw on decades of real estate market experience across multiple cycles. Its ongoing analysis covers 26 international real estate markets in Europe, Asia and the Americas. This activity includes preparing forecasts and associated market recommendations. The focus is on office, retail, logistics and hotel properties. Additionally, the residential real estate markets in Germany and Europe are closely monitored.
The situation in potential investment locations to which we currently have no exposure is likewise tracked. Furthermore, the team explores issues such as demographics and cycle analysis which have medium to long-term effects on the real estate markets.
Union Investment believes that sustainability and business success are inextricably linked. The Group-wide introduction of our Responsible Investment Policy means that sustainability considerations are firmly embedded in Union Investment’s investment processes.
Union Investment's sustainability management is based on the following principles:
- The United Nations' Principles for Responsible Investment (UN PRI)
- Sustainability Code for the real estate industry (ZIA – German Property Federation)
In order to achieve a sustainable portfolio design, we use specific tools to measure and analyse quantitative and qualitative data, and identify and implement potentials. These tools include:
- the Portfolio Sustainability Management System
- the Sustainable Investment Check
- Green leases (i.e. featuring clauses on sustainability), which Union Investment is continually integrating in its portfolio
- Participation in rating initiatives such as Scope and GRESB (Global Real Estate Sustainability Benchmark) for an external assessment of the sustainability performance of our real estate funds
More on sustainability:
We provide professional reporting. The scope and level of detail can be defined for each individual client based on their requirements. Examples of reports include in particular:
- Regulatory reports (e.g. MaRisk report, CRR report, GroMiKV (German regulation on large exposures and loans) report, Solvency II reporting, VAG (German Insurance Supervision Act) reporting)
- Fund reports (e.g. factsheet, monthly report, semi-annual report, annual report)
- Tax reports (e.g. taxation assessment principles (report pursuant to Section 5 of the German Investment Tax Act); tax reconciliation and offsetting of taxable income)
- Further information based on specific requirements (e.g. brief overviews, fund price time series, complete statement of assets or additional individual evaluations as requested by the client)
Awards and ratings
We are delighted by the regular awards and top ratings we receive for real estate management, portfolio management and customer service:
Associations and institutions
Union Investment has an excellent market presence, a strong network and extensive industry contacts. The company also offers clear competitive advantages in terms of market penetration, industry perception and visibility.
The following overview shows Union Investment’s close ties with selected international associations and organisations. We actively contribute to a number of bodies, as a member and participant, to develop standards and drive progress in other areas.
Would you like to know more about our institutional real estate solutions? Just give me a call. I look forward to hearing from you.