EUROPE - Unicredit pension fund has hired a subsidiary of insurer Generali to manage 鈧�500m of its 鈧�770m real estate portfolio.
The 鈧�2.14bn Italian pension scheme at the end of last year announced that it was seeking 鈥渁n appropriate solution鈥� to set up and manage a vehicle for a significant percentage of its property assets.
The scheme will continue to manage its 鈧�220m residential portfolio directly.
The decision announced today follows a KPMG-advised tender involving six potential managers. Among the unsuccessful bidders was Idea Fimit, an Italian operation set up by public-sector pension scheme FIMIT and private sector firm First Atlantic.
Generali said it would pursue 鈥渓ong-term management policies, consistent with the needs of an investor in the pension field鈥�.
A spokeswoman for Generali said the deal represented a breakthrough for the insurer鈥檚 plan to build its third-party property fund management business - which will begin full operations in July this year - from 鈧�28bn in assets to 鈧�36bn by 2016.
鈥淭here are new opportunities in the Italian real estate market, and we鈥檙e seeking to exploit them,鈥� she said.
鈥淭here is an increasing trend for pension funds to outsource real estate because they need specific expertise to manage a portfolio.
鈥淚f they don鈥檛 have it in-house, they will evaluate valued players like Generali with dedicated real estate teams and the expertise to do it.鈥�
Although it will hold on to in-house management of its housing portfolio, Unicredit鈥檚 decision to outsource the management of its real estate allocation is part of a broader shift within the Italian pension-fund market.
In addition to the significant cost and complexity associated with direct investment in real estate, Italy has seen the emergence of an alternative in central bank-regulated closed-end real estate funds.
