11 August 2017
Reporter: Theo Andrew

Varma Mutual Pension sees rise in real estate returns

Varma Mutual Pension Insurance’s real estate funds achieved returns of 4.5 percent, outperforming private equity and hedge funds, which both returned 3.6 percent in H1 2017.

The real estate funds’ returns are an increase on the 2.9 percent achieved in H1 2016 but are down on the 6.8 percent achieved during the whole of 2016.

Total allocation into real estate by the Finnish pension fund was 8 percent, while hedge funds and private equity allocations were at 14 percent and 6 percent respectively.

Real estate remained stable on the whole, achieving overall returns of 2.5 percent in H1 2017, just a 0.1 percent drop on the same period last year.

Ilkka Tomperi, investment director of real estate at Varma, said: “It’s true that for the H1 2017 our real estate funds delivered a very good 4.5 percent return compared to direct (ungeared) domestic real estate returning 1.9 percent.”

“The performance of real estate funds also exceeded that of our private equity and hedge fund investments for the first half of the year. Both of these returning 3.6 percent.”

The news comes after it emerged that pension funds in the US are increasingly turning towards real asset strategies in search for higher returns, according to research from eVestment.

In addition, the results have been underpinned by “surprising” economic growth in the eurozone.

“Our real estate fund investments have benefitted of the recovery and growth of many of the European core markets and a combination of good cash flow return, some capital appreciation and successful exits,” Tomperi said.

In July, Varma sold seven residential properties in Finland to Barings Real Estate Advisors for €43 million.

According to Varma, its investments take place through diversified real estate funds backed-up with project specific funds and co-investments, focusing on Finland, the UK, France, Germany and Sweden.

Overall, the results are consistent with the pension company’s overall investment returns of 4.7 percent, totalling €2 billion, as its investment portfolio reached a new high of €45 billion.

Listed equities was the company’s best performing asset class, generating returns of 7.9 percent in the first half of 2017.

More news
The latest news from Real Estate Investment Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Standard Chartered boosts CRE team
11 December 2017 | Singapore | Reporter: Stephanie Palmer
Standard Chartered has named Steven Cranwell as global head of commercial real estate for its global banking business
SoftBank and Compass in ‘largest ever’ US real estate tech investment
08 December 2017 | New York | Reporter: Stephanie Palmer
Real estate technology firm Compass has won $450 million in investment from the SoftBank Vision Fund, in what Compass has called the largest ever real estate technology investment deal in US history
Tristan fund makes first foray into Germany
07 December 2017 | Bonn | Reporter: Stephanie Palmer
The CCP 5 long-life fund, a core-plus fund advised by Tristan Capital Partners, has made its first investment in Germany, acquiring an office complex in Bonn for €35 million
JLL develops UK corporate solutions team
07 December 2017 | London | Reporter: Stephanie Palmer
JLL has named Sue Asprey Price as lead director of its corporate solutions business in the UK, with immediate effect
Link Asset Services appointed as real estate fund administrator
06 December 2017 | London | Reporter: Stephanie Palmer
Warehouse REIT, a specialist warehouse investor managed by Tilstone Partners, has selected Link Asset Services for fund administration
Dutch portfolio sold for €200 million
05 December 2017 | Amsterdam | Reporter: Stephanie Palmer
Patrizia Immobilien AG has sold a portfolio of 61 residential properties in the Netherlands, for around €200 million
Allianz tops off bumper 2017 with Broadway acquisition
04 December 2017 | New York | Reporter: Stephanie Palmer
Allianz Real Estate has acquired a 43 percent stake in 1515 Broadway, New York, a class-A building valued at $1.95 billion