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Institutional real estate investors embrace Master-KVG structure, says survey

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German institutional real estate investors are increasingly embracing the Master-KVG structure, which is based on the principle of separate asset management and administration, according to Universal-Investment survey.

Respondents cited two key advantages of the Master-KVG structure: greater transparency compared with all-in-one solutions and greater flexibility in the choice of provider. On a sector level, real estate investments remain focused on office properties, but investments in residential and retail assets are expected to increase. Institutional investors with total assets under management of more than EUR 50 billion, including pension funds and insurance companies, participated in the survey, which was completed in autumn 2014. The survey respondents manage a total of about EUR 6.1 billion in real estate assets.

Forty percent of surveyed institutional investors plan to use a Master-KVG or Service-KVG as a platform for their real estate investments in future. As a result, the Master-KVG approach, which Universal-Investment launched in 2011 also in the real estate sector, looks set to gain prominence in this sector. Master-KVG structures enable investors to pool all of their investments in one administration platform. This platform handles all aspects of administration including structuring, launch and fund accounting. It also links up the asset managers which institutional investors have appointed to manage their investments in different market segments and strategies.
 
This approach has established itself as the leading form of investment in the German securities world. More than EUR800 billion, or about 70 per cent of assets held in institutional special securities funds, are now administered through Master-KVG structures. 

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