ING Real Estate Investment Management is moving from core funds towards value-added funds. It plans to launch new vehicles later this year.
At present, only 12 of ING REIM’s 70 funds are value added. The company’s most recent launch was the ING Real Estate Iberian Value Added fund, an unlisted closed-end investment vehicle.
Initially ING REIM set out to raise €250m but it has exceeded this target and achieved a total commitment of €300m in equity.
Pieter Hendrikse, chief executive of ING REIM Europe, said the company hopes to launch other value-added vehicles investing in Germany, France and the Netherlands before the end of the year.
Citing a recent INREV survey which found that investors want value-added vehicles, Hendrikse said: “With the low returns of the core market and low yields, it is difficult to generate the returns that we were used to in the past.”
He added: “You have to have deep knowledge of the market and be able to prove to investors you can both source and add value to properties.”
Describing the move as a natural progression for the company, he said that low-yielding properties are just too expensive to launch core funds at the moment and that the decision is not influenced by rising interest rates.
“It is about market opportunity, investors’ interest and ING Real Estate Investment Management’s capacity and capability,” he said.
ING REIM has 36 core funds. Hendrikse said that the future of these funds depends on the characteristics of each.
“Some of them are coming to the end of their life but we are discussing their future with the shareholders. We could consider adopting a value-added strategy, but we could also look at an IPO or continuation of the fund.”
