Interest rates have been at near-zero levels in the eurozone since September 2014 and expectations of a change in this outlook have been delayed as a result of how the pandemic is affecting the economy. This is compounded by central bank intervention in financial markets with massive liquidity injections, which has led to more conservative asset yields at negative rates. This is the main reason for which groups like MAPFRE have chosen to diversify their investments. The insurance group, while maintaining its characteristic conservative line, has focused on alternative assets and, in particular, real estate.
MAPFRE’s strategy in this regard is clear: Opportunities in prime office buildings and in major European cities hand in hand with the most professional managers. “Investments in prime buildings in Europe’s main capitals have endured well — even during convulsive periods like this one. This gives added security for the future to continue with this strategy,” explains Rafael Saiz, a real estate investment expert.
MAPFRE currently has 500 million euros invested in real estate funds. Although it accounts for only a minute percentage of the balance sheet of some 70 billion in assets, this represents a clear change in trend. And it will go even further; “Next year, we hope that there will be opportunities in prime office buildings at attractive prices given the need for liquidity shown by certain players,” adds Saiz.
Over the past few years, MAPFRE has signed two major agreements. The first agreement was with Swiss Life, through which it launched a fund focused on office buildings in Paris — in total nine buildings representing a combined space of 22,000 square meters. This vehicle closed at 375 million euros, of which MAPFRE put up 50 percent of the capital. This was followed by the SIEREF project (a European real estate fund) with GLL, a subsidiary of the giant Macquarie. Through this agreement, it acquired buildings in Paris, Milan, Hamburg, Luxembourg and, more recently, London. Altogether, this fund, which is expected to complete the acquisition of another property in Europe in the next few weeks, will reach 300 million, of which MAPFRE also put up 50 percent of the capital. “The experience with these partners was so positive that we are already preparing new projects for next year,” adds the MAPFRE expert.
In addition to these vehicles with these two renowned managers, MAPFRE started diversifying into other funds with other typologies, also led by prestigious managers. MAPFRE invests between 10 and 20 million on average.
Along with the real estate sector, MAPFRE has more recently opted for other alternative assets. In collaboration with Macquarie and its partner Abante, MAPFRE launched an infrastructure fund, which is proving so successful that it aims to close at 300 million, surpassing the expected 200 million. A few months earlier, it launched a private equity fund with Altamar, worth 250 million — the fund raising for which is currently underway.