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ECONOMY| 27.04.2022

Find out more about our real estate funds investment with industry leaders

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“Let me ask you a question. Did you always write your own songs?” This is how Michael Jackson began his conversation with George Harrison in the BBC Radio 1 studio, in the Yalding House building located in the London neighborhood of Fitzrovia. “Well, John and Paul were writing before we made a record,” replied the former Beatle. The ‘King of Pop’, surprised, responded: “How did you guys do it?” “I don’t know,” Harrison added. “They were very clever guys.”

The meeting of these two legends of music came during a series of interviews, dubbed “Roundtable,” conducted during 1979 by David “Kid” Jensen, as recorded in the BBC archives.  In addition to witnessing historic interviews such as this one, the building housed the network’s Central Music Library, which boasted a collection of more than one million vinyl records, between 1952 and 2012. Today, although it no longer has the BBC as a tenant, this emblematic building is part of MAPFRE’s portfolio of assets included in one of its real estate funds. Specifically, the insurance group purchased this office property of almost 2,700 square meters in November 2020 at six stories high and completely renovated in 2016, which houses the US startup Slack and other companies such as Russells Solicitors and O&P Management. The transaction was carried out through the SIEREF-GLL fund, which MAPFRE launched with its managing partner Macquarie (formerly GLL) and serves to exemplify the strategy it has pursued in recent years to diversify its investments in a low interest rate environment.

This foray into real estate funds, initiated in 2018, is being undertaken with the sector’s leaders. On April 27th, in fact, it announced a new partnership with Munich RE for the launch of another vehicle to invest in ‘prime’ offices in Europe, which was launched with assets from both partners to attract new institutional investors and will reach a volume of €1 billion in 2025.

MAPFRE’s journey in the real estate market through funds began four years ago, in 2018, with a co-investment vehicle together with GLL (currently the Macquarie group) to invest up to €300 million in prime offices located in prominent European cities such as Luxembourg, Hamburg, and this iconic building in London.

Subsequently, the Group reached an agreement in 2019 with Swiss Life for the investment of prime offices in Paris. It also strengthened its alliance with the Swiss firm by creating a Joint Venture (with an initial volume of assets valued at 400 million) to invest in the Spanish and Italian real estate market.

In total, MAPFRE has currently committed a total of €625 million through these and other smaller funds, of which almost €600 million has already been distributed.

Alternative assets

Although the real estate sector may account for a large part of MAPFRE’s total investment in alternative assets (around 60%), there are other investments that have diversified the Group’s commitment to long-term profitability.

MAPFRE and Abante continued their strategic alliance in 2020 by creating a infrastructure fund with Macquarie of up to €300 million. Considered a ‘fund of funds’, this product began with the purpose of giving investors access to a type of asset that would allow them to diversify their portfolios.

Along these lines, and together with Abante and Altamar, MAPFRE launched a private equity fund in the same year (the MAPFRE Private Equity FCR)—called ‘evergreen’—with the idea of covering the needs of insurers and other institutional investors who have to invest in very long-term assets.

Apart from those mentioned above, these sustainable investments have represented an additional commitment by the insurance group to search for more profitable alternative assets. Specifically, in April 2021, MAPFRE reached an agreement with Iberdrola to jointly invest in renewable energies and, in this way, boosting the insurer’s commitment to the inclusion of ESG criteria in investment analyses.