In a challenging market environment, Union Investment’s institutional property funds continued to grow in the current financial year. Property assets increased by around EUR 1.2 billion and were therefore 5.3 percent higher than the previous year’s figure as at 30 November 2023. At around EUR 24 billion, the property assets of the solutions for institutional clients reached a new high. Union Investment also achieved growth of around 3.5 per cent in assets under management in the institutional real estate business. With new capital commitments of around EUR 380 million, Union Investment’s funds were also able to buck the general trend of declining inflows into open-ended property funds. Union Investment’s range of solutions for institutional property clients currently comprises 39 products, including 22 Service KVG mandates.
“Our mutual funds and special funds for institutional investors were able to counter the inflation-induced rise in interest rates on the capital market with high index-based rent increases and thus reflect a corresponding movement towards a new equilibrium in returns,” says Wolfgang Kessler, member of the management board of Union Investment Institutional Property GmbH. Taking into account the partial tax exemptions, opportunity yields are predominantly in the range of 3.6 to 4.0 per cent compared to the competition. “Themed funds and customised solutions often exceed these yields,” says Kessler.
The occupancy rates in institutional property solutions are generally between 95 and 100 per cent. “This results in stable income streams for the coming years and a good basis for good returns and stable distributions,” says Kessler. Similarly, despite a difficult (sales) market environment in the institutional mutual funds, sales were also successfully realised and the capital base of the products strengthened.
Despite the challenging market environment, the signs for 2024 at Union Investment in the institutional segment point to moderate growth. “In addition to increased demand from institutional investors for stable core funds, we are also seeing a stable trend in demand for bundled vehicles. We see good prospects here for further expanding our steadily growing range of solutions over the next twelve months,” says Managing Director Maximilian Brauers.
