Maximising international effectiveness, maintaining customer proximity
The SIMGO project was launched at the end of 2006 to ensure Union Investment was equipped to meet future demands in the real estate sector. A conscious decision was taken to outsource commercial and technical property management in Germany, while at the same time boosting in-house tenant management as a key element in the value chain.
“Previous analysis had already shown that our real estate activities needed to be more strongly aligned with the capital markets than had previously been the case. Going forward, the aim was to implement product ideas faster and in a more structured manner. We also had to address new customer expectations in terms of responsibilities, transparency and external reporting,” says Dr. Reinhard Kutscher, head of the Real Estate segment, looking back on the project. Reorganisation of the Real Estate segment with regard to property management in Germany was a key plank of the measures adopted. In particular, this included outsourcing technical and commercial property management to a suitably qualified and proven service Provider.
At the same time, management of the operational Property Management units and the strategic Tenant Servicing and Letting functions became a core task within Asset Management at Union Investment Real Estate GmbH. Using an external service provider to handle operational property management enabled a better allocation of resources to reflect the increased frequency of transactions and mostly long-term management of real estate assets. By retaining the tenant management function in-house, Union Investment remained true to its tradition of close contact with customers. Today, five regional letting offices throughout Germany with ten tenant relations managers in total are responsible for tenant servicing, as well as new lettings and relettings.
A strong presence in global markets, a continuing commitment to listening to tenants
As part of the SIMGO project, the Management Board was also extended to include a newly created International Asset Management post. “Making these adjustments created the right conditions for leveraging opportunities in the global markets even more effectively,” explains Dr. Kutscher. There were also major changes to fund management, with its role being redefined. The new fund managers were given full responsibility for performance, while also taking on the function of internal customer vis-à-vis Asset Management and the newly created Finance & Participations unit, covering aspects such as cash holdings, currencies and equity interests.
The delegation of Management Board tasks to the fund managers was also evident in the revamped acquisition process. Submission of a proposed acquisition to the investment committee by the investment manager was made conditional on the fund manager’s approval. Accordingly, the fund manager retains an overview of all assets held by the individual investment funds, whether properties, equity stakes or cash, at all times. Reorganisation of the Real Estate segment combined this strong focus on performance with a clear ongoing commitment to customer proximity. By listening closely to customers, the company can be more responsive to their needs and maximise the value of its holdings. The approach thus remains people-centred.