Share of residential properties in open-ended property funds rises to average of 2.1%

Open-ended mutual property funds are increasingly looking to residential properties: Their share in fund portfolios has risen moderately in recent years, accounting for 2.1% of net target rent as at 30 June 2020. By comparison, this figure had been 1.1% one year ago (30 June 2019) and 1.0% the year before that (30 June 2018). This information comes from figures by the German fund association BVI. However, BVI statistics also show that the average residential share is still relatively low overall. By contrast, the major categories of “Office/medical practice” and “Retail/food” are at 54.1% and 25.1% according to the BVI.

Michael Schneider, Managing Director of INTREAL, commented: “Before the financial crisis in 2008, there were practically no apartments in open-ended mutual property funds. Several products specialising in residential properties have been launched since then. In particular, these include FOKUS WOHNEN DEUTSCHLAND from INDUSTRIA WOHNEN, UniImmo Wohnen ZBI from Union Investment and WERTGRUND WohnSelect D from WERTGRUND.”

Recent funds have comparatively high residential shares

But other, more recent funds also have comparatively high residential shares, such as grundbesitz Fokus Germany, which has a residential share of around 27%[1], or Swiss Life REF (DE) European Real Estate Living and Working, with a residential share of 16%.[2]

Michael Schneider says: “I expect that the residential share of funds will rise significantly moving forward. Special funds, which are usually several steps ahead of mutual funds, show us where we’re headed: The trend towards more residential is much clearer here. While their residential share had been just 6% in 2014, by 2019 it was a mighty 35%.[3] The true extent of this rise becomes even clearer when you look at the market growth over this period: While the net fund assets of all special funds were still EUR 47.1 billion at the end of 2014, by the end of 2019 it was around EUR 104 billion.”

Coronavirus crisis will change investment modes

The coronavirus crisis will accelerate the change in investment modes in mutual funds. “During the crisis, residential properties have once again demonstrated their economic independence and resilience. That’s exactly what private investors – the target group for mutual funds – are looking for. At the same time, other categories in which funds traditionally also invest – mainly hotels and non-food retail – are no longer as sought-after,” is Schneider’s analysis.

[1] Fund figures for grundbesitz Fokus Deutschland September 2020

[2] https://www.livingandworking.de/zahlen-und-fakten/ [retrieved on 21 October 2020]

[3] BVI Yearbook 2020, page 75.

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Growth at INTREAL continues to gain momentum in Q3 2020

IntReal International Real Estate Kapitalverwaltungsgesellschaft mbH (INTREAL), Germany’s leading third-party real estate AIFM, continued its growth trajectory in the third quarter of 2020. Assets under administration (AuA) came to EUR 35.7 billion as at the end of September 2020, representing an increase of around EUR 1.5 billion since the end of the second quarter (EUR 34.3 billion as at 30 June 2020). The first nine months of the current financial year saw growth of approximately EUR 4.4 billion (EUR 31.3 billion as at 31 December 2019). The slowdown in growth in the months from April to June caused by the coronavirus pandemic was thus largely recouped in the third quarter.

Michael Schneider, Managing Director of INTREAL, commented: “After growth slowed in the second quarter as expected due to the coronavirus pandemic, we saw significant recovery in the third quarter. This applies to strong investor demand and the good performance of specific capital commitments, as well as the fact that available funds were not reduced and capital commitments already made were not revoked. All in all, despite the negative impact of the COVID-19 pandemic we expect growth in the 2020 financial year to reach a similar level to the previous financial year and for this to continue in subsequent years, too.”

Looking to the future, Schneider added: “Our focus in the upcoming months will be primarily on preparing for the upcoming ESG regulations. The Disclosure Regulation that comes into effect on 10 March 2021 represents the first of the EU measures. Further regulations will follow throughout 2021. The whole matter of ESG will change the property fund sector. The sustainability of property investments is a top priority at present, especially among institutional investors.”

The increase in the third quarter and the capital commitments and fund plans for Q4 are not spread equally among all property classes. “At the moment, there is particular demand for logistics and residential fund types. Non-food retail and speciality funds such as “healthcare property” or “urban district development” etc. – all relating to property asset classes, which have been less affected by the crisis – also play a key role. Nonetheless, there are also specific plans for office property funds. Given the experiences of the pandemic, however, there is a stronger focus here on targeted tenant selection. Here, too, there are winners and losers due to the crisis,” said Schneider.

While only four new funds were launched from July to September 2020, the high number of new funds in the pipeline indicates significant growth potential. The number of properties under administration rose by 56 in the same period, showing that not even the pandemic has shut down the transaction market, which also picked up considerably in Q3. As at 30 September 2020, the third-party AIFM thus administered 186 funds and a total of 1,517 properties.

Regardless of the coronavirus pandemic and with an eye to good long-term development prospects, INTREAL continued to make further additions to its workforce in the third quarter. The staff headcount at the company increased to 332 thanks to four new hires. This is a rise of 42 on the end of the 2019 financial year. “Given the stiff competition for qualified new staff and managers, continually expanding our human resources is a top priority for us. This allows us to ensure high quality of support for our customers and investors at all times while we grow. We are particularly delighted that, despite the pandemic, we were able to complete our planned location in Frankfurt at Erlenstrasse 2 almost on schedule and that we are now optimally positioned to support our customers directly from Frankfurt,” said Schneider.

Solid growth at Administration Services and Partner Funds

INTREAL’s business is divided into the two major business units Partner Funds and Administration Services. In Partner Funds, the third-party AIFM offers customers such as asset managers and project developers without an AIFM licence all services relating to the launch and administration of an alternative investment fund (AIF). In the Administration Services business unit, INTREAL provides services for other licensed management AIFMs, including complex administrative tasks such as reporting, controlling, fund accounting and investment and risk management. Partner funds accounts for around 60% of AuA, with Administration Services responsible for about 40%.

Both business units achieved solid development in the third quarter. AuA in Partner Funds rose by around EUR 734 million in Q3 to EUR 21.3 billion. The number of funds administered in this business unit increased by 1, bringing the current total to 100. AuA in Administration Services picked up by about EUR 732 million to approximately EUR 14.4 billion in the third quarter of 2020. The number of funds for which services are provided rose by 3, totalling 86 as at 30 September 2020.

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High demand for open-ended special property AIFs despite coronavirus pandemic

Open-ended special property AIFs are posting positive net inflows even in the coronavirus pandemic. This can be seen from an analysis of Bundesbank statistics. In the second quarter of 2020, the funds received net inflows totalling approximately EUR 2.0 billion. By way of comparison, the figure for the same period of the previous year (April to June 2019) was also around EUR 2.0 billion.

Michael Schneider, Managing Director of INTREAL, comments: “Only the month of March recorded a net outflow of EUR 44 million. In April, May and June, there were significant inflows again at around EUR 660 million, EUR 740 million and EUR 586 million respectively. In view of the economic slump of 10.1% of gross domestic product (GDP) in the second quarter, these results are very pleasing. These figures are also consistent with our view of the market. Since mid-May, we have been observing increased transactions and capital commitments again.”

Looking at net inflows over a longer period – for example, since 2013 – the swings in the current crisis are not all that significant. Michael Schneider comments: “A longer-term view shows that monthly inflows are generally rising. Whereas in 2014 the moving twelve-month average was still around EUR 500 million per month, this figure steadily increased in the following years. At the end of 2019, it crossed the mark of EUR 1 billion per month. This trend will not be interrupted by the coronavirus crisis, either.”

It is also interesting to compare the inflows with other asset classes. For example, special funds in the as-set class of equities recorded outflows of EUR 5.9 billion in the second quarter. For the asset class of bonds, there were outflows of EUR 97 million. “These figures show that institutional investors are carrying out a reallocation in the crisis. They are withdrawing funds from securities funds and redistributing them to property funds in some cases,” says Schneider.

Open-ended special property AIFs also continued to grow during the coronavirus

In line with inflows, the net fund assets of all open-ended special property AIFs also continued to grow during the coronavirus. Compared to a level of EUR 124.3 billion before the crisis at the end of March 2020, they had reached EUR 127.1 billion already by the end of June. This corresponds to an increase of EUR 2.7 billion in three months. By way of comparison, growth had come to EUR 2.5 billion in the same period of the previous year. Michael Schneider: “The figures show that property investments remain in high demand and industry assets are continuing to increase. However, a slight dip in this growth can be seen from February 2020 onwards as compared to the very good year 2019. This is where the impact of the pandemic is reflected in the statistics.”

The number of vehicles also developed positively. Overall, the number of open-ended special property funds rose by seven between March and April (March: 540 funds, June: 547 funds). For comparison, the number of funds went up by 20 in the whole of the very good first quarter of 2020 (December 2019: 520 funds, March 2020: 540 funds).

“The figures show that the very good first quarter can partly offset the weaker second quarter. This also matches our own company’s development. At INTREAL, the number of funds in the Partner Funds business unit rose by twelve in H1 2020, eleven of which were attributable to the first quarter,” says Schneider. In this business unit, the third-party AIFM offers customers such as asset managers and project developers without an AIFM licence all services relating to the launch and administration of an alternative investment fund (AIF). The number of funds administered by INTREAL increased by 16 in H1 2020 in the AIF Administration Services Business unit. In this segment, INTREAL performs services for other licensed management AIFMs.

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INTREAL grows by around EUR 950 Million in Q2

INTREAL, Germany’s leading thirdparty real estate AIFM, continued its growth path in the second quarter of 2020. Assets under administration (AuA) rose to EUR 34.3 billion at the end of June, representing an upturn of around EUR 950 million against the first quarter of 2020 (EUR 33.3 billion as at 31 March 2020). Nonetheless, the impact of the coronavirus pandemic did slow the pace of growth, as a comparison against the first three months of the year shows: INTREAL’s AuA picked up by EUR 1.9 billion in the excellent first quarter.

Michael Schneider, Managing Director of INTREAL said: “We generated excellent quarterly figures in light of the tough economic conditions from mid-March. Although the growth curve flattened off somewhat due to the coronavirus pandemic, as expected, property funds remain in high demand even during the crisis. We have been seeing a return to substantially higher investor demand and concrete capital commitments since as early as mid-May. We also prepared and launched attractive new property fund concepts in the last quarter. Accordingly, INTREAL generated key growth momentum for the second half of the year in the second quarter, which was heavily shaped by COVID-19.”

Seven new funds were launched from April to June 2020 and the number of properties under administration rose by 58 in the same period. As at 30 June 2020, the third-party AIFM therefore administered 182 funds and a total of 1,461 properties.

Unconstrained by the coronavirus pandemic, INTREAL hired new staff in the second quarter in response to its growth. 18 new employees were recruited between April and June, boosting the staff headcount to 328. “Investing in qualified staff is essential to continuing to ensure high-quality services moving forwards. Of course, this is also true in economically challenging times. Our 328 employees at our locations in Hamburg, Frankfurt and Luxembourg allow us to ensure that our business model is viable and sustainable in the future,” said Schneider.

Slightly stronger growth in AIF Administration Services segment than in Partner Funds

INTREAL’s business is essentially divided into two major segments – Partner Funds, which accounts for about 60% of AuA, and AIF Administration Services, which makes up about 40% of administered assets.

The Partner Funds segment grew by approximately EUR 431 million to EUR 20.5 billion in the second quarter. In this segment, the third-party AIFM offers asset managers and project developers not licensed as AIFMs all services for the issue and administration of alternative investment funds (AIFs). The AIF Administration Services segment generated growth of almost EUR 526 million in the second quarter of 2020, climbing to around EUR 13.7 billion. As part of this segment, INTREAL performs services for other licensed AIFMs, including complex administrative services such as reporting, controlling, fund accounting and investment/risk management.

Another focus of the last few months has also been on expanding and building up the INTREAL holdings Real Exchange AG (REAX) and easol GmbH. REAX brokers shares in property funds between institutional investors on the primary and secondary market. As the secondary market can be particularly relevant in crisis situations, the market timing for this exclusive service is certainly available at the right time. Commenting on this, Schneider added: “At REAX, which was launched as an open market platform, the stake acquired by established market player Real I.S. represents a key milestone in business development.

easol offers an all-in-one IT solution for managing properties, real assets and other property funds. easol gained new customers, including the strategic investor and asset manager CR Investment Management. These successes show that our strategy of investing in new companies that offer services complementing our own business is paying off.”

Focus on ESG in H2 2020

The topic of sustainability will take centre stage at INTREAL in the second half of the year. “ESG criteria are increasingly important in our industry. European legislation is driving this change and sustainability is becoming imperative. Although this does entail substantial additional costs in some cases, it does not necessarily run contrary to our profitability targets. We all have to integrate ESG into our processes. INTREAL has created its own, internal group of experts for this topic and will help its fund partners prepare for the new regulations to the best of its ability,” said Schneider.

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Open-ended property funds defy coronavirus crisis

Open-ended mutual property funds are holding their own in the coronavirus crisis. As current Bundesbank figures show, open-ended property funds reported positive net inflows during the coronavirus crisis as well. Even in April, the month with the strictest shutdown regulations in Germany, funds generated net inflows of around EUR 300 million. In March, the second half of which was also heavily impacted by the crisis, funds amassed net inflows from investors of around EUR 670 million. This figure was EUR 380 million in May. By comparison, net inflows had amounted to EUR 1.9 billion and EUR 1.3 billion in January and February 2020.

The figures show that while fund inflows have diminished during the crisis, they are still very positive. The sector’s net fund assets are likewise developing well. At the height of the crisis – April 2020 – open-ended property funds surpassed EUR 110 billion.

Michael Schneider, Managing Director of INTREAL, said: “Open-ended mutual property funds are proving highly resistant to the coronavirus crisis. We are a long way removed from the sort of scenarios we saw after the 2009 financial crisis, when huge sums were withdrawn from funds over a short space of time, and the vehicles faced severe liquidity problems. The moderate decline in inflows is likely mostly due to the fact that customers didn’t go to their banks during the lockdown – even though they were open throughout.”

Mutual funds are still mostly sold face-to-face at a bank or by a personal consultant. Schneider added: “Savings plans with fixed monthly premiums no doubt also contributed to stability. Savings plans in which private investors deposit fixed monthly amounts in a property fund were still going during the crisis.”

Calls to return funds very low during crisis

Another key indicator of fund stability is requests by investors to have their assets released. Owing to the notice periods, the funds will not have to return such investments for another year. “There are no public figures for the sector as a whole. However, as far as the funds managed by INTREAL are concerned, we can say that the amounts returned in March and April were very low. In total, they account for less than 1% of fund assets. The liquidity buffers currently on hand can handle this no problem,” said Schneider.

“In my opinion, open-ended property funds will be among those to benefit from the crisis in future as well,” said INTREAL’s managing director. “The high volatility on the stock markets and the extension or expan-sion of the zero interest rate policy is causing a run on ‘concrete gold’. Other fund classes experienced high cash outflows during the crisis. For example, equity funds for private investors reported a drop in inflows of EUR 5.7 billion in March.”

Wide-ranging impact on different property types

Nevertheless, there have been differences within open-ended property funds as well. Schneider explains: “The open-ended property funds that are doing best during the crisis are those that largely focus on crisis-resistant asset clas-ses, such as residential, logistics and ‘systemically important retail’. According to the BVI’s quarterly analy-sis from the end of March 2020, residential currently accounts for 2.0% and logistics for 4.2% of properties in all open-ended property funds. The situation is mixed for food and retail, the second-most important type of use at 25.3%.

While properties with food retail tenants and other retailers that remained open in the shutdown phase on account of being systemically important are performing well, the situation has been difficult in some cases for other retailers and shopping centres in particular, which also have a high share of food outlets. All properties with tenants that work in travel are naturally having an even harder time of it. Obviously this primarily means hotels, but also traditional office users such as travel agencies or tour and flight operators.

At around 54% on average, the most important type of use for open-ended property funds is the office segment, where the split between core and non-core is likely to widen again. As open-ended property funds typically follow a core strategy, I expect to see a stable performance from office properties – provided that their tenants do not predominantly operate in industries that have been badly affected by the crisis.”

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INTREAL launches 14 new funds in first quarter of 2020

IntReal International Real Estate Kapitalverwaltungsgesellschaft mbH (INTREAL) can report a successful start to 2020. The third-party AIFM launched a total of 14 new funds in the first quarter of 2020 and now administers 175 funds. With 72 new properties added, the number of properties under administration rose from 1,331 (Q4 2019) to 1,403. The total volume of assets under administration (AuA) grew by €2.2 billion from €31.1 billion to a total of €33.3 billion. INTREAL hired 20 new employees in Q1, bringing its total number of employees to 310.

Michael Schneider, Managing Director of INTREAL, says: “INTREAL posted a strong first quarter – despite the foreseeable and perceptible effects of the coronavirus crisis in March. Due to the pandemic, we generally anticipate stagnating figures in the second quarter, but we also see a possibility that the property asset class could maintain or even increase its importance in the investment world of both private and institutional inves-tors in the crisis and afterwards. We are currently benefiting from the systematic expansion of our IT infra-structure, which allows us to remain fully operational even in times of social distancing and to position our-selves optimally with our fund partners now and in the future.”

Partner Funds segment grows by €1.5 billion, AIF Administration Services by €0.5 billion

The company’s growth breaks down as follows: The Partner Funds segment for national and international asset managers grew by more than €1.5 billion to €20.1 billion in the first quarter of 2020. As such, INTREAL achieved half of the growth generated in 2019 as a whole as at 31 March 2020 already. Accounting for approximately 60% of total AuA, Partner Funds is still the most important of the administration specialist’s segments.

AIF Administration Services also saw strong demand in the first quarter. In this segment, INTREAL takes on all back-office activities for other alternative investment fund managers (AIFMs), enabling them to increase their efficiency in an environment of rising regulatory costs. “The current crisis has shown that outsourcing activities to a large and efficient third-party AIFM makes an important contribution to the stability of a company’s own business,” says Michael Schneider. This segment grew by €0.5 billion to €13.2 billion in the first quarter.

Staff headcount increases to 310

The growth generated in the first few months of 2020 was accompanied by the recruitment of 20 new fund specialists. In total, the INTREAL had 310 employees as at 31 March 2020. As well as expanding its IT, the third-party AIFM also established the new Treasury department as a long-term response to the company’s general growth and the additional requirements arising from the strong growth of the open-ended mutual property funds administered by INTREAL.

 

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INTREAL creates new Treasury department and gains Uwe Janz as head

INTREAL is combining different services relating to cash flow management in a new Treasury department and has gained Uwe Janz (55) as Head of Treasury. The newly established department pools the areas of financing, banking and liquidity management, which were previously based in different departments. Uwe Janz has more than 30 years of experience in trading, capital markets and treasury at banks and alternative investment fund managers (AIFMs). He can also contribute extensive real estate expertise.

Michael Schneider, Managing Director of INTREAL, comments: “INTREAL has grown substantially in recent years. To handle this growth, we must also adjust our internal company structures accordingly. The number of funds, investors, accounts and payments has significantly increased. In particular, the growing number of mutual property funds increases the requirements for liquidity management. It was therefore a logical step to pool these activities in a new department. With his extensive experience, Uwe Janz is the right expert to head up our Treasury department. So I am delighted that we have been able to gain him as a colleague.”

Uwe Janz, the new Head of Treasury at INTREAL, adds: “The Hamburg-based third-party AIFM is a dynamic and fast-growing company. I am looking forward to applying my many years of experience at banks and fund companies.”

Before joining INTREAL, Janz served as head of financing and treasury for AIFMs of the fund provider KanAm Grund for eleven years. His responsibilities there included commercial real estate finance, managing and assessing loan portfolios, and supporting asset management for property purchases. Before KanAm, he spent eight years as head of foreign exchange trading and interest rate derivatives at M.M.Warburg & CO.

The qualified banker’s earlier career also includes positions at Société Générale, the bank Merck-Fink & Co and Hamburgische Landesbank.

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Market for Closed-End Funds grows by around EUR 3.4 billion in 2019

After a few weaker years, the market for closed-ended property funds is growing, almost at a rapid pace in the last year. An analysis of Bundesbank statistics found that it rose by around 13% in 2019. While net fund assets for all funds came to just EUR 23.4 billion at the end of 2018, the figure climbed to about EUR 26.8 billion by the end of 2019. The trend can be seen even more clearly by looking back over 24 months (December 2017 to December 2019), with growth of 21% or around EUR 4.7 billion. The Bundesbank groups together closed-ended vehicles for private and institutional investors under the heading of closed-ended property funds.

Michael Schneider, Managing Director of INTREAL, commented: “The market for closed-ended property funds is once again experiencing a robust upward trend. Since the introduction of the new regulations under the German Investment Code, closed-ended property funds have been launched as investment KGs. With this, the closed-ended vehicles seem to have adopted a ‘new look’ and found their target customers and investment focal points again.”

Net inflows of one billion euro expected

Looking ahead to 2020, Schneider said: “I think that the good performance will continue in 2020. I am anticipating net inflows of well over one billion euro for the year as a whole. We can also see the positive trend in talks that we are currently holding with providers. Various new closed-ended AIFs will come onto the market in the months ahead. Following the major market consolidation after 2008, a smaller number of providers has emerged who provide the market with new products on an ongoing basis.”

The KVG INTREAL service manages closed-ended AIFs with net assets of around EUR 5.1 billion. At around EUR 5.0 billion, closed-ended property special AIFs account for the lion’s share of this, and the figure is growing. By contrast, the share of closed-ended retail AIFs is far smaller at EUR 92 million. INTREAL did not establish any closed-ended funds for private investors in 2019. INTREAL does not have any specific plans for new vehicles in the next few years. By contrast, further products are being prepared for open-ended mutual funds and strong growth is expected.

The Bundesbank’s statistics recorded a total of 1,446 closed-ended property funds for institutional and private investors at the end of 2019. Schneider commented: “The raison d’être for closed-ended property funds is the two investor groups. They can be an interesting building block in asset investment for wealthy, experienced private investors with a long-term investor horizon and who are aware of the risks. This particularly applies to specialised funds involving a particular country allocation or foreign currencies, such as with US property. For institutional investors, closed-ended AIFs are used predominantly as club deals for large-volume individual investments with two to four investors. This opens up investment opportunities beyond the usual investment limits for individual properties in the open-ended special AIF.

Relatively small market for closed-ended funds

All in all, however, closed-ended property funds remain significantly less important than their open-ended counterparts. Figures from the Bundesbank statistics show that they account for only about 12% of open-ended vehicles overall. According to the Bundesbank, the net fund assets of all open-ended property funds (mutual and special funds) came to EUR 226.2 billion in December 2019 and increased by EUR 28.3 billion in 2019 alone. Closed-ended property funds, on the other hand, come in at just around EUR 26.8 billion in net fund assets.
Both institutional and private investors rank the risk-diversified, open-ended funds high up on the popularity scale. This is turning closed-ended funds into a niche product for special investment cases and selected target customers only, both now and in the future.

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INTREAL Surpasses EUR 30 billion mark in 2019

IntReal International Real Estate Kapitalverwaltungsgesellschaft mbH (INTREAL) continued its growth in 2019. Assets under administration (AuA) amounted to around EUR 31.3 billion at the end of 2019 (end of 2018: EUR 24.4 billion). Rising by EUR 6.9 billion, the earnings figure for 2018 (EUR 5.8 billion) was surpassed once again. INTREAL had 161 property funds under administration as at the end of 2019, an increase of 23 compared with the previous year. The funds manage 1,331 properties in total (2018: 1,100).

Michael Schneider, Managing Director of INTREAL, said: “INTREAL celebrated its tenth anniversary in 2019. One particular milestone in this anniversary year was when AuA hit EUR 30 billion in November 2019. Naturally, this rapid development in our business means challenges as well. It is a matter of the utmost importance to us to keep the quality and professionalism of our services at a high level. We have invested extensively in personnel, processes and IT to ensure this goal. Over the past year, we hired 53 fund experts across all divisions, bringing our headcount to almost 300 by the end of 2019. The new hires work at our head office in Hamburg and at our new office locations in Frankfurt and Luxembourg. Qualified staff and their systematic ongoing development are still our most important investment for our complex activities. This is true regardless of the advances in technology and digitisation.”

High investment in IT and creation of new Treasury department 

Parallel to its recruitment activities, INTREAL has invested extensively in its IT. The processes and applications specific to funds were optimised, bringing them to the state-of-the-art with an eye on the future. Examples include licence agreements for the new SAP Release S/4HANA and the addition of a number of new functionalities to the bison.box software solution from control.IT. “This has also consolidated our edge over our competitors. At the same time, it enables our IT experts to serve the demand for our fund-specific IT solutions. Since 2019, our interest in easol GmbH has allowed us to offer all real asset managers a holistic IT solution,” continued Schneider.

A third plank of our quality assurance is ongoing projects on the latest key issues, such as ESG or the improvement of the organisational structure. INTREAL’s Managing Director added: “Over the past year, for example, we bundled out specialists for banking, financing and liquidity management, who were spread throughout the company, in the newly created Treasury department. This facilitates the more efficient handling of the high processing volumes in all areas. Above all, the issues of managing and investing liquidity have gained in significance as a result of the growing number of mutual property funds under administration. Furthermore, additional services and analysis and consulting activities for our customers have also been assured.”

Partner Funds division grows by EUR 3.1 billion 

Accounting for approximately 60% of total AuA, Partner Funds is still the most important of INTREAL’s segments. It had a volume of EUR 18.6 billion at the end of 2019 (2018: EUR 15.5 billion). In its Partner Funds segment, INTREAL offers asset managers and project developers not licensed as AIFMs all services for the issue and administration of AIFs. INTREAL’s Schneider added: “In addition to open-ended special funds, we also launched more mutual property funds in 2019. The fund partners are primarily property managers who have been serving institutional investors to date and now want to make their expertise available to private investors as well. We also see the strong product demand among private investors on the one hand and providers’ pronounced property expertise on the other as an additional growth field and an ideal product diversification for INTREAL.”

Demand for AIF services continues to rise 

INTREAL’s second major division is AIF Services, which performs services such a fund accounting, controlling, reporting and investment/risk management for other licensed AIFMs. This segment’s AuA grew to EUR 12.7 billion in 2019 (end of 2018: EUR 8.9 billion). Schneider explained: “The business momentum in AIF Services has since overtaken that of Partner Funds. A number of AIFMs on the market are facing rising regulatory costs while returns on property are diminishing at the same time, and so they need to become more efficient. One approach is to step up outsourcing, which not only reduces costs, but also allows access to specialist expertise. A third advantage is the focus on core property competence, which – as our figures show – is proven to lead to faster growth.”

INTREAL to expand Luxembourg location in 2020 

INTREAL is assuming that the business performance in fund business will remain positive in 2020. INTREAL’s Schneider said: “I predict that growth in 2020 will at least match the 2019 level – so around EUR 6 billion. All of INTREAL’s segments will continue to grow significantly. The planned increase in institutional fund products has already been largely secured by capital commitments and definite seven- figure property investments.”

Furthermore, the expansion of the Luxembourg location will also be a priority in 2020. Schneider commented: “We anticipate a great deal of potential in Luxembourg, as additional product variants can be implemented there and more international investors can be addressed than with German investment vehicles alone. Several specific funds are currently in the preparation and implementation phase. Parallel to this, we are currently conducting very promising talks with interested partners.”

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