Swiss Life Asset Managers is acquiring two top-class office proper-ties in Berlin and Antwerp for its Swiss Life REF (CH) European Properties real estate fund, as well as a light industrial property in the greater Stuttgart area and a residential property in Oldenburg. In addition, the sale was completed of the property in Oxford. A further capital increase is planned for autumn 2022.
Four years following launch, the “Swiss Life REF (CH) European Properties” real estate fund has acquired total fund assets of just under EUR 715 million as of the end of 2021, with further acquisitions in Berlin, Antwerp, Korntal-Münchingen and Oldenburg. This has in-creased the fund’s location and tenant diversification, thus continuing its quality strategy.
As of the end of 2021, the portfolio consisted of 19 core properties in nine countries and it is also well diversified regarding types of use. The fund's successful growth will continue with a planned capital increase in the autumn of 2022. The fund already has an attractive deal pipeline in London.
A diversified portfolio
The newly built Impuls office building in Berlin was acquired last October. The "DGNB Gold"1 certified property comprises around 12 125 square metres of bright office space in a central location close to Pots-damer Platz. The entire building is leased for ten years to a state institution that supports the implementation of the German government's development programmes in the area of environmental, nature and climate pro-tection.
In September 2021, the fund made the first purchase of a light industrial property in cooperation with the Swiss Life Asset Managers’ logistics competence centre BEOS AG. The property was built just under two years ago and is let for the next 18 years to a German paint and varnish company, which is part of a major interna-tional corporation. Given its proximity to its customers, automobile companies, the property in Korntal-Münchingen (Stuttgart) is a strategically important location for the tenant. One building is used as an of-fice/head office, while the other one is used for the production and storage of paints and coatings. There is open land on the property allowing the fund to add premises for the tenant. The property will be certified according to BREEAM2 this year.
In Antwerp (Belgium), the fund acquired an office property that is let for nine years to one of the leading Belgian insurance companies. This insurer has been in the regional head office building since 2006. The ten-ant's credit rating is first class. The property comprises some 9300 square metres of office space on four very bright upper floors and is "BREEAM very good" certified.
The residential development project in Oldenburg (Germany) was completed at the end of 2021 and trans-ferred to the fund. The 73 apartments are located in several buildings close to nature next to a river. The letting is proceeding very well, in spite of the work on the outdoor greenery not having yet been completed. The apartments have attractive and very individual floor plans with high ceilings and high-quality fittings.
In January 2022, the fund was able to sell the office property in Oxford (UK) at a very attractive price in a successfully run bidding process. The building was acquired at the beginning of February 2018 for approx-imately GBP 35 million (net). The sole tenant recently left the building following internal restructuring but will continue to pay rent until the lease expires in 2027. The fund benefited from the bona fide boom in the life sciences sector with a sales price more than 60% above the last external valuation.
Advantages of European real estate investments
Investments in European real estate continue to generate attractive returns in the current sustained low interest rate environment. They also have a low correlation to other asset classes. Swiss investors can thus use European real estate investments to significantly diversify their portfolios.
Since 2018, Swiss Life Asset Managers has been a signatory to the UN Foundation for Principles for Responsible Investment (UN PRI). Environmental, social and governance (ESG) factors are systematically integrated into th investment and risk management processes at Swiss Life Asset Managers. In the real estate investment business, appropriate criteria are taken into account both in the purchasing process as well as in construction projects and property management.
Swiss Life REF (CH) European Properties has been dealing with ESG topics for some time now and therefore participated in the GRESB3 sustainability bench-mark for the first time last year. The fund immediately received three stars, "Green Status" and a score of 72 percent. The fund also aims to further improve the ESG aspects this year. One measure, for example, is the tenant survey in the residential property in Offenbach, which enables the fund to take corresponding measures based on the survey findings and further increase tenant satisfaction.
1DGNB: German Sustainable Building Council
2BREEAM: Building Research Establishment's Environmental Assessment Method
3GRESB: Global Real Estate Sustainability Benchmark