Fortis

With the exception of a handful of US investments, the company has concentrated on the Dutch and Belgian markets, operating a separate business for each country

Fortis, the Belgian/Dutch combination of bank/insurer created by a 1990 merger, has grown fast through acquisitions. Its property activities are dispersed over the group’s banking and insurance arms, with banking running property financing and insurance the rest.

The main focus is Fortis Investment Management, which holds property investments for private and institutional investors as well as managing the property assets of the insurance business. Fortis is also active in property development.

These activities are carried out in Holland and Belgium through separate companies. The only other market of note for Fortis is the US, where it is involved in property investment linked to its US insurance business. This extensive coverage of the property market is similar to that of fellow bank insurer ING, although Fortis operates on a smaller scale and confines itself mainly to the Benelux market.

Fortis’s asset management arm looks after €6.6bn worth of property investments, which is barely 2% of total investments under management, rising to 4% when assets invested on its own account are included. In the past few years the share of property in Fortis’s total investment mix has hovered around 4% and the company has no plans to raise this, despite property’s good performance in the past few years.

Fortis’s Dutch investment business manages €2.7bn of property assets, 30% of which are managed for third parties. Recent investments include a €125m mixed-use scheme by MDC which bridges the A10 motorway in Amsterdam. Fortis has also bought the former Marks & Spencer store in The Hague, which will be integrated with an adjoining shopping centre it already owns.

In the asset management field, the company has found a niche in running funds that buy supermarkets, aimed at private investors. Its foreign investments in France and the US have dropped below the €100m mark and are being sold.

In Belgium, Fortis manages €3bn of property. In April it acquired Belgian property company Bernheim Comofi from Security Capital European Realty for €525m, the main attraction being €1bn of property assets. These provide diversification, as they include an 85% stake in Interparking, the largest car park operator in Belgium, Germany and Italy and active in four other European countries. Bernheim’s asset management division manages €1.5bn of assets, including two sicafis (tax-efficient investment vehicles). Bernheim is also active in property development in the Belgian market.

The Dutch property development company covers the whole spectrum of commercial and residential development, concentrating on large schemes in prime locations. It is part of a consortium developing a mixed-use scheme including 160,000m2 of offices at South Axis, Amsterdam’s new prime office location. It is also developing a business park near Schiphol Airport, has two large office schemes in The Hague’s central business district and is planning a 150m block of flats Rotterdam’s centre.

Fortis is a major player in its home property markets but, as in other fields of business, still has some way to go in developing an integrated approach. The Bernheim deal has brought more international exposure, but the company’s focus is still on the home market – as with its parent company, which, outside Holland and Belgium, only operates in niche markets. Market consolidation may see Fortis absorbed by a larger international financial services provider, allowing it to expand its property activities on a wider stage.

Key financial figures
30% of Dutch property assets are managed for third parties
	2001 €m	2000 €m
Investments on own account	147.6	134.2
Investments for third parties	168.5	179.6
Property assets	6.622	5.405
Total assets under management	316.1	313.8
Source: Fortis

Investment performance
Property’s share of total investments has hovered around 4%
Annual returns (%)*	2001	2000	1999	1998
Property	10.1	10.5	8.5	9.4
Shares	-10.6	0.8	15.8	25.6
Debt securities	5.8	6.4	6.1	6.9
Others	4.4	1.6	3.1	3.4
Total	4.2	5.8	7.0	8.5
*Investment income as % of quarterly average book value
Source: Fortis