The Swedish SEB Group offers a comprehensive range of global and local investment products and has more than 130 billion euro in assets under management worldwide. It's real estate arm, part of SEB Asset Management, is based in Frankfurt, and offers real estate and securities investments, specializing in total return strategies. The company's experience and expertise make it the SEB Group's global center of competence for real estate.
The company's real estate success story began in 1989 with the launch of SEB ImmoInvest. Its largest real estate mutual fund with a gross fund volume of approximately 8 billion euro grew as the Investmentgesetz (German Investment Act) developed, from a fund that invests in Germany and Europe to one that invests around the world.
As noted by Mr. Chua Choy-Soon, Managing Director, SEB Investment GmbH, as of today, the company manages 14 billion euros of real estate globally on behalf of both retail and institutional investors. This amount is split up among various funds, most are core funds which are income driven and some of total return funds which are less income driven.
The majority of the funds, about 70 percent are in office sector, with the remaining in retail, industrial space and residential. For that matter, it is only in Asia (total investment of 1.5 billion euro) that SEB has invested in the residential sector.
“We are the quality leader in the real estate fund market and are expanding our activities for our clients in three areas: SEB real estate and SEB securities investments under one roof; Growth and expansion of the real estate mutual fund business; and, Development of attractive products for institutional investors,he said.
The company believes that real estate, fixed income and multi- asset approaches are particularly well suited to total return strategies. Products based on these strategies are especially attractive to investors seeking a high probability that their income expectations will be met.
“To us, total return means generating a continuous positive target return independently of the market, and hence of a benchmark. This allows us to meet our clients need for types of investment that have visible income flows and that ideally deliver returns above the risk-free money market rate.
Total return means limiting risk, rather than eliminating it. The key parameters here are value at risk and maximum drawdown.
“This is a concern we hear repeatedly by both our institutional and our retail clients. That壮 why SEB Asset Managements performance profile systematically focuses on a total return philosophy. Our concepts are based on real estate, fixed income and multi-asset strategies,he said.
The combination of timely allocation changes to regional exposures and stringent underwriting standards has led to extremely stable performance over decades. For this reason, the recent financial turmoil did not affect the company's investments negatively.
Mr. Chua noted that the key factor determining the stability of a real estate funds performance is the investment strategy chosen by the funds management.
SEB Asset Management recently won an IPD European Property Investment Award 2010 in the specialist category for Germany for its SEB ImmoPortfolio Target Return Fund. The open-ended real estate fund already won IPD awards in 2008 and 2009 for the highest average total return relative to the appropriate sector benchmark over three years in Germany.
IPD defines a specialist fund as a portfolio of interests in real estate concentrated to at least 70% of its capital employed in a single main sector. Nine countries took part in this year's competition: Germany, France, Ireland, Italy, the Netherlands, Norway, Portugal, Switzerland and the United Kingdom.
“Over two decades, SEB Asset Management has shown how to turn real estate funds into solid total return investments. Our investment strategies focus on achieving a stable cash flow on the basis of a balanced risk/return ratio. We continually optimize the risk/return profile through strategically structured portfolio diversification particularly with regard to markets, the mix of locations and tenants, and property sizes,he said.
Be it a blockbuster or a smaller niche product, SEB Asset Management guarantees creative intelligence and technical brilliance throughout. SEB's investment process is based on a combined top-down / bottom-up approach. Firstly, the property markets are compared using a top-down approach based on a market scoring model. However, the success of a real estate investment depends not only on the correct selection of the target markets, but also on the selection of individual properties.
This is why the results of the market scoring model are also included in the property scoring system, which compares individual properties. Property scoring is used on both existing properties and prospective acquisitions. Finally, the effects of investments on the portfolio must also be taken into account. Clear portfolio-specific investment rules ensure that the target risk / return position for the overall portfolio is kept in mind during individual transactions.
The market scoring model filters and assesses the investment universe to identify the markets
in which an investment could be attractive in the near future (working universe). The filter
criteria serve to restrict the scope of the investment universe and are applied both at the country level and during analysis of the types of use. Both socio-economic factors and factors specific to individual real estate markets are used when assessing real estate markets and these, too, are analyzed at both country and sub-market level. The threshold values for the filter criteria and the weightings of the assessment factors differ depending on the target risk / return profile. In the case of core products, the focus is on generating cash flows that are as stable as possible rather than on potential appreciation of the net present value.
As a result, longer-term factors are given a higher weighting than is the case for more risk-oriented investment approaches. The description below focuses on the core approach.
After the ranking has been performed, the working universe is divided into a target list
and a monitoring list. The target list consists of the target markets for investments, while the monitoring list comprises markets that are under observation but where no investments are actively planned in the short term. In principle, real estate markets qualify as target markets if they fall within the top third of the overall ranking. In a second step, they are compared with the existing portfolio and the feasibility of new investments in terms of resources is established.
The company's three new real estate special funds thrive on our many years of SEB real estate experience on three continents: SEB Americas REI, SEB Asia REI and SEB Europe REI offer access to the world壮 key real estate markets, as total return funds in the conservative risk segment.
The company founded SEB Asian Property SICAV-FIS as a Luxembourg-registered special fund in 2007. This fund is the first vehicle in our product range that invests exclusively in Asia. Over the past three years, it has invested more than 1.5 billion euro in China, Japan, Malaysia and Singapore for all the funds.
Although the company has no investments in Korea, he noted that the company hopes to gain more momentum once the market opens further. Until recently, Korea has been tough for foreigners, but hopefully more opportunities will come in this cycle, he said.