North Rhine plays a wait-and-see game

By Kathleen Chu  |   2008-11-18  |     NEWSPAPER EDITION

NORTH Rhine Doctors Pension Fund, a 9 billion euro (US$11 billion) German fund, said yesterday it was too early to invest in global property stocks and real-estate investment trusts because credit markets would tighten further.

The fund, with 12 percent to 15 percent allocated to global real estate, hasn't invested in the sector this year, Hermann Aukamp, chief investment officer of real estate at North Rhine told Bloomberg News. The fund sold all its investments in Asian real-estate shares and trusts in early 2007 before the Bloomberg Asia-Pacific Real Estate Index declined as much as 68 percent from a peak this month.

"It is too early to decide where opportunities are," Aukamp said in an interview last Thursday. "This is completely different from other cycles we have seen in the past. The main guideline is now not to lose money."

The possibility of a prolonged global economic slump and a lack of financing have sent the FTSE EPRA/Nareit Global Index to the lowest in almost a decade.

The fund, which started diversifying into real estate outside Germany a decade ago, was shifting back to its home country, a market with which it was more familiar, Aukamp said in Tokyo, where he attended the Real Estate Investment World Conference.

North Rhine had 55 percent allocated to investments in Germany, 25 percent in Europe, and 10 percent each in Asia and the United States, he said.

The euro's 19-percent decline against the greenback and 25-percent drop against the yen in the past six months had added to uncertainties international fund managers faced.