France’s €14bn 100% SRI fund ERAFP awards €310m property mandates

Significant 10-year contract boosts AEW’s existing money run for the fund.

ERAFP, the €14bn Paris-based French Public Service Additional Pension Scheme – a 100% SRI pension fund – has taken a major new step by awarding a long-term 10-year contract to AEW Europe SGP for a €310m real estate mandate. The new mandate adds to an existing property brief won by AEW Europe in November 2011 from ERAFP – the fund’s first foray into the asset class – for a €40m contract to acquire and manage a Paris office building. The latest mandate handed to AEW is for an unlisted property portfolio in France including investment in offices and retail premises, housing and student accommodation. In time, ERAFP said the fund may also invest in other real estate asset classes such as logistics facilities and serviced accommodation. While the contract is for a significant 10-year term, ERAFP said performance would be measured over a three-year time horizon. French property fund managers, Amundi Immobilier and La Française Real Estate Managers have been hired as stand-by managers for the €310m contract.
ERAFP said that specific ESG guidelines for its SRI real estate mandates were specifically drawn up by the fundbefore the tender and subsequently negotiated with the fund managers selected. ERAFP’s investments must meet an investment charter that includes rule of law, human rights, social progress, democratic rights, environmental and governance standards. The French fund, which manages retirement contributions for 4.6 million French civil servants and takes in annual contributions of €1.7bn making it one of the continent’s fastest growing funds, has also suggested that it will up its allocations to sustainable real estate. At the time of launching the French tender in February 2012, the fund also went to market for a €345m unlisted property brief for European OECD member countries, again with two stand-by mandates. Those mandates have yet to be awarded, but a decision is expected in April, according to ERAFP. In an interview with RI in 2009, Philippe Desfossés, Chief Executive at ERAFP, said the fund planned to earmark a good portion of its future cash flows to property: Link to article
Paris-based AEW Europe, a subsidiary of Natixis Global Asset Management, runs over €17.5 billion in property assets.