Aviva eyes property acquisitions, but not in EM
Property Down Under is looking up for Aviva Investors, which is eyeing office, retail and logistics sectors in Australia, in addition to Japan, for its regional property portfolio.
“We’ve been quite actively looking at Australia for a number of months," says Ian Hally, Aviva Investors Asia-Pacific real estate chief executive. “We’ve been successful in acquiring one [logistics] asset [there] and there may be more to come.”
In mid-2011 the firm launched the Aviva Investors Australian Logistics Property Trust to invest in logistics real estate. Last September, the trust acquired a 50% stake in Sydney’s Hoxton Distribution Park for A$97.4 million.
Aviva’s property portfolio in Asia-Pacific has a heavy concentration of real estate in Australia, Tokyo and Singapore, but has no plans at the moment to invest in the region’s emerging markets.
“It’s important that we invest in the region’s more liquid markets,” says Hally, given the conservative appetite of Aviva’s investors, which include pension funds, insurance companies and fund of fund investors.
“Most investors are relatively cautious in terms of how much risk they’re willing to take on,” he notes. The firm invests in the region mainly through the open-ended Aviva Investors Asia Pacific Property Fund, which had $523 million in assets under management as of December 2011.
“What we’re looking to do with the fund is diversify away from some of the markets which are quite cyclical in the region, for example Singapore,” says Hally.
Aviva this week disclosed that its Asia property fund had acquired two real estate assets in Melbourne and Sydney for a total of A$83.3 million, with the proceeds entirely funded by the fund's recent sale of a Singapore property asset.
Aviva is well-versed on property values in the Lion City, having organically grown a team there starting in 2007, when Hally was assigned to set up a permanent office for the firm.
It has changed offices three times over five years to accommodate a growing team of 56 staff who manage equities, fixed interest and real estate.
The 15-member property team will have one newcomer joining in the next few months. “We see growth continuing in the region,” says Hally.
The expansion of the Asian team comes as Aviva has been reducing its workforce in the UK. It has set out to cut about 160 jobs in London, which equates to 12% of its workforce, in a bid to refocus on core strengths in fixed income, property and multi-asset funds.
Last week Aviva Investors' Asian equity and fixed income CEO, Tahnoon Pasha, spoke to AsianInvestor about what the global realignment meant for its Asia business.