Segregated property mandates a growing trend, says Aberdeen
EUROPE - An increasing number of investors are opting for external management in a bid to squeeze returns out of their property portfolios in a challenging economic environment, according to Aberdeen.
Tonny Nielsen, Nordic region head of investment management at Aberdeen, noted an increase in segregated mandates driven by investors' perception that local active managers with a strong presence were more likely to deliver performance.
"In a bull market, growth and return almost came automatically," he said. "Now, in a bear market characterised by vacancies and weaker tenant demand, you need to make a strong effort to maintain a stable return and protect values."
Nielsen said he expected more investors to follow what he said was a global trend.
His comments came after Danish wildlife charity Aage V Jensen awarded Aberdeen a segregated mandate to manage its directly held properties worth €170m - the latest in a recent trend for institutional investors to outsource management of their real estate portfolios.
Up to now, the foundation has managed the 17 commercial and residential assets in its exclusively domestic portfolio in-house, but employed an external administrator.
Foundation president Mette Skov said in a statement that hiring a professional asset manager would be "crucial to creating satisfactory returns".
In another development, Swedish insurer SEB Trygg Liv has rolled over an existing segregated mandate with Aberdeen for another three years.
The mandate, to manage its €2bn Swedish property portfolio, charges the asset manager with reducing vacancies within the portfolio and improving its sustainability rating measured against European and local sustainability standards.