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AP1 Lead Investor in New Aberdeen Secondaries Fund

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ap1_swedenFörsta AP-fonden (AP1), one of five buffer funds for the Swedish pension system, is acting as lead investor in Aberdeen Asset Management’s new secondaries fund Aberdeen European Secondaries Real Estate.

According to Aberdeen, the secondaries fund received just over €151 million in commitments and will be composed of around 15 funds with exposure to 200 European properties.

Sweden’s €105 billion (US$ 142.72 billion) national income pension system is managed by five AP funds: AP1 – AP4 and AP6 – AP5 was dissolved and no longer exists. (For further enquiry, AP1’s website has a consolidated history of the funds). Each fund is independently managed. AP1 is tasked with generating a total return of 5.5% over a rolling 5 year period. In its semi-annual report, AP1 reported that it had produced an annualized return of 6.1%, surpassing its target.

However, despite this performance, the funds have been criticized for high fees and less than stellar returns. The Swedish government commissioned Mats Langensjö, a management consultant, to conduct a report on the funds’ alleged inefficiencies. His recommendations were to consolidate the funds from 5 to 3 with an organization to be named the Pension Reserve Board overseeing the entire operation.

Langensjö’s suggestions were made just over one year ago, but until now the Swedish government has not fully acted on them. The only positive action came in the form of an April 8th newsletter in which the Swedish government stated it would review the AP funds sometime this year. For now the matter is still ongoing.

Shaktikanta Das Named as New CB Governor for India

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The Indian government named Shaktikanta Das as the new Governor of the Reserve Bank of India. He will be the 25th governor to lead the central bank. Das is India’s former economic affairs secretary who stepped down in May 2017.

Das replaces Urjit Patel, who stepped down as central bank governor for “personal reasons.”

Urjit Patel had been arguing with India’s finance ministry on matters such as easing lending policies versus what the appropriate size of foreign reserves should be.

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UBS and APG Form Japanese Residential Property Venture

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Long horizon institutional investors are keen on taking advantage of appealing underlying fundamentals in select Japanese residential submarkets that have experienced population growth versus rural areas. The housing market in Tokyo has decoupled from the rest of Japan due to attractive demographics and low interest rates. Real estate valuations for Japanese housing in Tokyo is still at a distance relative to the very-much inflated market of the late 1980s. UBS Asset Management Real Estate & Private Markets business and APG Asset Management, which oversees the assets of Stichting Pensioenfonds ABP, formed a new property joint venture to invest in residential properties in Japan. UBS Asset Management will manage the fund and partnership, while APG will play a strategic role. APG will contribute US$ 175 million into the venture.

This platform will pursue a build-to-core investment strategy with some allocation to the reconfiguration of income-producing operating assets in cities such as Tokyo and Osaka.

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GIC Sells 2 Chifley Square to Charter Hall

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Singapore’s GIC Private Limited sold a 100% ownership stake in a large building in Sydney, 2 Chifley Square, for A$ 98.5 million to the Charter Hall Prime Office Fund, a wholesale real estate fund. Charter Hall Group owned the building next to Chifley, the Gresham building at 167 Macquarie Street.

Advisors for the transaction are Colliers International and KPMG Real Estate Advisory.

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