MPMA is the Dutch engineering industry pension fund. It is known for its anti-cyclical property investment strategy, and purchases made several years ago in the UK and US are now benefiting from the recovery in those markets. They helped the fund to achieve a total return on its foreign direct investments of 15.2% over 1996, against 10.4% in The Netherlands. But the major contributor to the fund’s overall return of 16.7% on property was indirect investments (35.9%), again mainly on account of the performance of US and UK holdings.
Foreign property investments amount to 45% of the total, but this will be lifted to at least 50% by the year 2000. At the same time, the share of real estate in the total investment portfolio is to be increased from 13.5% to 15%, or from NFl 3bn to around NFl 4.6bn, allowing for further anticipated fund growth. This implies net investments of NFl 1.6bn over the next four years, of which around NFl 1bn will be abroad.
The USA is the main foreign investment market, with some NFl 800m currently housed there. The anti-cyclical acquisition of a half-share in a 73,000 m2 office building in Boston in 1995 has paid off handsomely. So have indirect investments via REITs.
The fund is still committed to further spending in the US, where it aims to increase its assets to NFl 1.2bn by the turn of the century. Time- and country-specific targets and contrarian investment policies do not make good bedfellows. Seeking out sectors which are lagging in the US recovery is becoming more difficult, and the bulk of the planned expansion is therefore set to take place this year, with NFl 150m earmarked for direct purchases and NFl 200m for indirect investment in two funds.
UK acquisitions in 1993 were well-timed to take advantage of the upturn in the property market. Two office buildings in the City and a stake in Rodamco UK have contributed to the good returns on foreign investments. However, the fund now considers the UK market fully valued and has no plans for further investments in this country.
MPMA’s third foreign market is France, where it had just over NFl 100m invested at the end of last year. The fund now considers France as the most attractive of its main markets for anti-cyclical investment and aims to lift is assets here to NFl 300m by the year 2000. The 10,500 m2 Le Monge office building in La Defense, owned with three other Dutch institutional investors, has just been renovated and 85% let. Last year, MPMA made its first indirect investment in France by buying into the quoted company Unibail; it is also to take an 8% share in a FFr 1.6bn fund managed by Unibail, Crossroads Property Investors.
|
NFl |
1996 |
1995 |
|
Total assets |
22181 |
19054 |
|
Property investments |
3017 |
2336 |
|
– direct |
2258 |
1817 |
|
– indirect |
759 |
519 |
Within its overall allocation plan, some NFl 400m is earmarked for further international expansion with Spain, Portugal and the Far East as possible targets. The fund does not share the fashionable preference for purely indirect vehicles, but is happy to mix both forms of investment.
However, it adds the important proviso that indirect holdings should be in locally-based companies or funds rather than those with an international spread. This keeps the fund in control of the geographical and sectoral allocation of its assets and allows it to practice its anti-cyclical strategy.
In The Netherlands the fund has over the last few years built up a retail portfolio through buying packages of unit shops and funding some smaller shopping centre developments. The share of retail will be increased from around 30% to 40% and the office content reduced to 20%. The balance is for residential investment, where scarcity of product has led the fund to start funding development.
MPMA
Burgemeester Elsenlaan 329
Postbus 5210
2290 HE Rijswijk
The Netherlands
tel 31 70 316 0160
fax 31 70 316 0505
