Interview: Mr. Andreas Martin, Head of International Acquisitions & Sales, Deka Immobilien Investment GmbH

The DekaBank Group, owned by savings banks and Landesbanken (Federal State banks), is the largest provider of open-ended real estate funds in Germany. The Groups two investment companies, Deka Immobilien Investment GmbH and WestInvest Gesellschaft fuer Investmentfonds mbH, have a total of more than 21 billion euro in assets under management. Deka Immobilien GmbH is affiliated with these companies and is responsible for global real estate purchases and sales, real estate asset management, and all other real estate services, including product development.
Bundling the Groups real estate services in Deka Immobilien and streamlining and simplifying organizational processes has generated large synergy effects that provide a win-win situation for all parties involved.

As noted by Andreas Martin, Head of International Acquisitions & Sales, while the two capital investment companies concentrate entirely on their core tasks of fund management, risk management and fund controlling, Deka Immobilien powerfully combines the functions of property acquisition and sale, real estate and resource management, and development of additional innovative products.
“Because we leverage this concentrated clout in the world’s real estate markets, backed by our own meticulous market research, we are a sought-after business partner. This in turn helps us continually improve the performance of our products and strengthen our leadership in the market for german real estate mutual funds,” he said.
This means that market participants have access to an even broader range of properties, offering attractive rental space in the office, shopping, logistics, distribution and hotel sectors.
The company's activities in the most liquid international real estate markets are represented by more than 410 offices, retail properties, hotels, shopping centers and logistics centers in 23 countries on four continents.
'We represent an international network of specialists providing the highest level of expertise and professionalism. For over 40 years, Deka Immobilien has been the acknowledged market leader with innovative products based on high standards of quality and transparency. Not only do we lead in the field of mutual funds and have set the standards for individual property funds and special funds for institutional investors, but also, our offerings have been confirmed by premium ratings — for the quality of both our products and our management.”
Properties are purchased on the basis of stringent return and quality criteria. The knowledge of local markets and leading market research ensures the quality of decisions during a timely, clearly structured and rapid investment process, he said.
Through the two capital investment companies, Deka Immobilien also offers a wide range of
open-ended mutual funds for private investors and special and individual funds for institutional investors. These two companies completely run all the property funds, managing their portfolios and performance.
“Besides these established investment products, we offer a variety of 'fund of property funds' models that are developed in collaboration with the FoF specialists of DekaBank/ Deka Investment GmbH. These products range from approaches based predominantly on German open-ended property funds all the way to international value-added and opportunity funds of funds, offering a wide spectrum of opportunity/risk profiles.”
Speaking on the company's investment strategy, he noted that all purchases and sales are systematically aimed at acquiring high-return properties for the Groups two investment companies and selling properties that no longer conform to its portfolio strategy.
He noted that along with very quickly and professionally handling large-volume acquisitions and sales in all of the world’s major real estate markets, the company also provides professionally organized financing services to other investors.
The advantages this generates for purchasing assets benefit millions of private clients, as well as institutional investors, insurers, pension funds, and savings and loan banks.
“We make all of our investments on the basis of thorough macro and micro research. For many years we have had our own in-house economics team for this, which has earned
various kudos from the market, as well as an international network of leading real estate consultants.”
Speaking on the worldwide acquisitions of the company, he noted that the center of activity is mainly properties in commercial agglomerations, preferably with long-term lease contracts. Those are predominantly: Office buildings/Commercial buildings; Shopping Centers; Industrial Parks; Hotels; Logistics Centers; Real Estate of Mixed Usage and Premises with Potential for Development. The company also develops Projects for the public sector and let them long-term to authorities generally to relieve public budgets.
The properties are purchased on the basis of demanding return and quality criteria. The familiarity with local markets and market-leading research ensure high-quality decisions as part of a systematic, clearly structured and speedy investment process. The process of buying and selling properties plays a very important role in active portfolio management of the kind practiced by Deka Immobilien. In order to hold onto existing clients and win new ones, property investments have to yield convincing returns, he noted.
“We achieve this not only through innovativeness and clout for making acquisitions and sales, but also by excellently managing the properties belonging to our funds. Our real estate management service package also includes first-rate building management and maintenance.
The focus is on ensuring long-term success for both investors and tenants, who profit from our size, market prominence and global positioning.”
In this context he noted that the company recently sold the fully let office property Eugene Investment & Securities Building in Seoul, for around 123 million euro. The closing of the transaction took place on May 31st.
Michael Endres, Senior Investment Manager, International Acquisition & Sales, noted that the building has been acquired by the Korean Public Officials Benefit Association, a semi-governmental fund company which manages the pension funds of civil servants.
Located in the city's Yeoido business district, the property has been held in the portfolio of the Deka-ImmobilienGlobal open-ended mutual property fund since September 2004. With an investment volume of almost 70 million euro in 2004, the price now achieved on the sale was around 30% higher than the current appraised value of approximately 95 million euro.
He explained that after uncertainty in the capital markets last year facilitated the exploitation of investment opportunities, the recovery already evident in some markets can now be used to realize sales at a profit. The total floor space of the property of around 40,000 sqm is let almost entirely to Eugene Investment & Securities on the basis of a long-term agreement.
“The sale of the property forms part of active portfolio management. In addition to the successful disposal of properties at a convenient moment, this includes acquiring properties of first-class quality in prime locations and value-enhancing property management,” he said.
Martin said that Korea continues to be an attractive market for the company, and investments will continue, even as some of the assets are flipped when the timing is right.

Read more »

Interview: Mr. Chua Choy-Soon, Managing Director, SEB Investment

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.

Read more »

Interview: Mr. Choi Jong-man, Commissioner of Gwangyang Bay Area Free Economic Zone Authority

Designated a free economic zone in October 2003, the Gwangyang Bay Free Economic Zone has unlimited potential to become a global logistics hub with an unrivaled transportation network, a world-class industrial infrastructure, incomparable living conditions, and business friendly environment featuring a variety of attractive deregulation and support policies.
GFEZ is comprised of five districts, each with its own mission in the overall development. Each of the districts has its own development agenda, with the first phases well under way and ongoing through 2011. They comprise: Gwangyang District (Logistics), Yulchon District (Manufacturing), Sindeok District (Residential), Hwayang District (Tourism) and Hadong District (Multi-purpose). Since its establishment in 2003, the GFEZ Authority has been able to attract a total of 6.5104 trillion won worth of investments from approximately 80 companies (59 local, 31 foreign), creating 17,165 new jobs, which has given a tremendous boost to the growth of the regional economy.
In particular, the active participation of the 31 foreign investors (38% of total investment) has established a bridgehead for GFEZ to serve as international business hub. It has attracted total 2.5938 trillion won from 31 foreign investors, and commercial traffic in Gwangyang Bay Area has also grown from 1.19 billion to 1.81 million TEU (53% increase), which has played an important role in the economic growth of Jeollanam- do.
Despite its relatively short duration of operation, GFEZ has been acting as a center of the economy of Jeollanam- do, as well as activating the economy of the east side of Korea.
In an interview,Mr. Choi Jong-man, Commissioner of Gwangyang Bay Area Free Economic Zone Authority, talks about his strategies to attract more foreign investors.

>>GFEZ has been designated as a Special Economic Zone, along with Busan and Incheon, by the Korean government. By offering special incentives for the foreign companies who invest, its strategy is to attract more investors and to contribute to the development and prosperity of the regional economy.
Gwangyang Port, thanks to the two-port system, has already been consolidated with industrial bases such as Gwangyang Steel Mill and Gwangyang Port Container Terminal even before the establishment of GFEZ. For this reason, with Gwangyang as a center, GFEZ was established aiming to become a global hub dealing with industry, leisure, education, and logistics.
Of course, attracting foreign investors and logistic companies is essential; however, it is also important to be accompanied with cooperation of Korea-based companies and activation of regional industry. GFEZ will focus on increasing container traffic as well as developing its strong manufacturing and high-tech industries.
>>All administrative procedures, ranging from investment advice to the start of the business will be handled by the GFEZ Authority, ensuring more convenient business start-up. A range of subsidies will also be provided once the company satisfies certain requirements, helping cutting costs and maximizing profits.
GFEZ offers far-reaching tax incentives and some areas may also enjoy the benefits of a free trade zone. For the foreign companies located inside the FEZ and free economic zone developers, 100 percent of tax exemption for national tax; tariffs, corporate tax, income tax, and local tax; acquisition tax, registration tax, property tax is offered.
Three years exemption of corporate tax, income tax, acquisition tax, registration tax, property tax, and comprehensive land tax for foreign companies that make a pre-qualified investment in manufacturing or logistics, and 50 percent reduction of all these taxes for an additional two years will be provided for foreign investors in Gwangyang Port Free Trade Zone (8.88).
Gwangyang Port Free Trade Zone also offers exceptionally low rental fee; 30 won/ per month for preferential rent and 200 won/ per month for basic rent. 28 companies including Samsung Tesco, SNNC, and Korea Express are the current tenants residing in the free trade zone.
>>GFEZ, mainly in Gwangyang and Yulchon District, is focusing on steel-making materials and non-ferrous metals, new and advanced high-tech materials, IT, compound and chemical product manufacturing, metal works related manufacturing.
In Hwayang District, it is aiming to develop as a great tourist destination to complement Korea’s southern coast tourism belt by attracting and building a unique place-golf-courses, spa resorts, shopping malls, and hotels- that combines beauty and the needs of tourists.
In Sindeok District, mainly Sindae Hinterland, is planning to develop a new residential, educational, and recreational town with international schools, marina facilities, hospitals, condominiums, townhouses, shopping centers, and top of the line amenities by 2011.
GFEZ expects 20 educational institutions and universities to be established within this zone. In this regard, Korea’s first fully foreign owned and accredited branch school, the Shipping & Transport College (STC-K) of the Netherlands, is already providing educational degrees to local and international students at their campus in Gwangyang Port.
In the matter of building medical facilities, foreigners or corporate bodies designed to provide medical services to foreigners under commercial law, and companies of which 50 percent or more is owned by foreign investors are allowed to establish medical centers and pharmacies within the district. Moreover, GFEZ offers the tenants of educational or medical institutions to use its land for free of charge.
>>First, GFEZ has the best geographical conditions and unrivaled transportation network to become a maritime transshipment cargo hub. It is located between China, Japan, and Russia and close to many major Northeast Asian ports including Shanghai, Hong Kong, Osaka, and Kaohsiung.
Domestically, there are four airports close to GFEZ: Yeosu, Gwangju, Muan, and Sacheon. Currently, three expressways, eight national roads, and eighteen regional roads are directly connected to GFEZ. Especially Jeonju-Gwangyang expressway is expected to be completed by 2010, which will cut driving time to Seoul to 3 hours. Besides, GFEZ is linked to two national railway lines; the Jeolla Line (North-South) and the Kyungjeon Line (East-West). Also, GFEZ has direct access to two industrial railways, the Gwangyang Line for steel transportation and the Yeocheon Line mostly for petrochemical products.
Second, GFEZ possesses the optimal infrastructure necessary for industrial activities. Nature gas for industrial production is planned to be supplied through pipelines across the GFEZ. Also, GFEZ has abundant water resources to fully meet its needs. Three rivers; the Seomjin, the Youngsan, and the Tamjin Rivers, as well as three dams; the Juam, the Suyeo, and the Tamjin Dams, are adjacent or within the area. Moreover, its stable electric power supply and environmental waste water supply make GFEZ as incomparable to the other free economic zones in Korea.
Lastly, combined with its abundant resources and geographical advantages, GFEZ makes it possible to secure the supply of materials, manufacture, and import at one-stop. This is a huge advantage compare to other free economic zones in Korea, considering convenience and cost-benefits.
>>Gwangyang Bay Free Economic Zone has excellent labor force and industrial infrastructure. While considering the advanced economic levels of Japan and China, they may seem to bring profits for short time, however, their high wages and expenses cannot be comparable to GFEZ in the long-term.
As the commissioner, I will continue to find better ways for GFEZ to become the best business-friendly Free Economic Zone in the world as well as in East Asia.
To do so, GFEZ will try to sign more MOUs with foreign investors by hosting a meeting with ambassadors, diplomats, and business leaders. Also, I strongly urge the potential investors to visit Gwangyang and experience its beautiful natural resources and attractive conditions.

Read more »

Interview: Mr. Chang Tae-pyong, Minister of Food, Agriculture, Forestry and Fisheries

The Ministry of Food, Agriculture, Forestry & Fisheries is taking efforts to make the food industry as the next growth engine, by encouraging foreign investors. The government has chosen “Profit-making Agriculture and Fisheries & Lively Rural Society” as one of its goals to pursue for the next five year term. In line with the government commitment, the Ministry for Food, Agriculture, Forestry and Fisheries aims to upgrade agriculture from primary production-based industry into advanced industry which encompasses processing and marketing so that our agriculture and fisheries can compete in a global arena.
Mr. Chang Tae-pyong, Minister of Food, Agriculture, Forestry and Fisheries tells us of his plans to promote Korea’s food industry as well as to attract more foreign investors in the national food cluster that is to be established in Iksan city.

>>MIFAFF will focus on creating an innovative agriculture and fisheries industry as the next growth industry for the next decade. We will stress importance to the following factors in order to take on the new innovative food policy:
-Reformation of the national agricultural cooperative federation and the national federation of fisheries cooperatives to be completed. Also, improvements in structure of agricultural and fisheries industry need to be made through stabilizing rural households’ income.
-Expand the new growth engines and promote high value-added branches such as innovative seed and bio-tech industry in order to set a new policy.
-Supply safe food through providing environment-friendly agricultural products, supply stabilization of agro-fishery products including rice, expansion and globalization of Korean food.
-Expand the rural farming and fishery business and revitalize the rural community in order to activate the regional economy
>>Despite the stagnation of agriculture in Korea, MIFAFF has been paying serious attention to sustainable growth of the food industry, and has selected it as a potential growing industry to create remarkable value.
In this context, MIFAFF decided to promote the national food cluster that will overcome the limits of low technology of the Korean food industry. We started by benchmarking the successful cases of Food Valley in Netherlands and Oresund Cluster in Denmark and Sweden.
Hence, the export-oriented national food cluster -Foodpolis- was announced to be formed in Iksan city by 2011 and it is our aim to become a hub of Northeast Asia’s food industry. Foodpolis (239ha) will set up an active manufacturing, processing and export system through a liaison with Saemangeum and Korea Food Research Institute (to be relocated in Jeollabuk-do). Inside the complex, about 150 research institutes and domestic/international companies will be attracted to promote traditional, functional and organically processed food. Also, about 6 government-supported facilities, such as cluster support centers and R&D centers, will support in developing special technologies, functional evaluation and boost competitiveness of the companies in residency.
>>The key goal of MIFAFF is to expand attraction of foreign direct investment into agro-food industry. In order to create the Foodpolis as a foodhold of FDI, MIFAFF will designate Foreign Investment Zone and grant various incentives such as supplying a low rent long term lease and support funds for agricultural policy and R&D.
MIFAFF will also give an impetus to attracting foreign investments by cooperating with professional investment agencies- EUCCK and Invest Korea. Moreover, we will constantly make efforts to seek ways to draw foreign investments in Fund of Funds for agro-food (KRW 100 billion) by 2011, high-tech glasshouse, and capital-intensive agri-business.
In early July, MIFAFF appointed a consultative committee comprising renowned food companies (Danone and Nestle), distributors (Homeplus) and quality-testing institutions (SGS). The committee will advise on foreign investment in the Foodpolis and will help to promote the national food cluster to related food companies. Also, the committee will participate in the workshop hosted by MIFAFF and visit the places like Foodpolis in Iksan and Saemangeum reclaimed shore, to discuss about  investment programs and improvement of the foreign investment conditions.
>>The European Union, with the world’s largest economy ($10 trillion), is the second partner to conclude FTA (official agreements to be signed in late 2010) with our country.
MIFAFF has been seeking ways to take measures for agriculture and fisheries houses to help from opening the market. In particular, the recent Korea-EU FTA is expected to threaten the livestock industry and we will try to come up with a radical reformation of the industry. For example, the market share of the domestic beef after resumption of U.S. beef is increased by implementing place-of-origin indication system and beef traceability: 44.2% (2004) → 47.6% (2008) → 49.8% (2009). Also, the planted areas for grapes after Korea-Chile FTA is rather increased by 12.1%: 1,641ha (2003) → 1,842ha (2006) → 1,840ha (2007).
Thus, FTA and DDA can be worked as a chance to increase agricultural trade with neighboring countries with huge market like China and India. China’s interest for health and well-being could impact on the country’s export for food companies as well as the whole agricultural sector.

Read more »