Real estate investments failed: Bavarian Pension Fund admits compliance violations

Despite loss-making US real estate investments, the Bayerische Versorgungskammer (BVK) achieved a net return of 3.4 percent in 2024. Germany's largest pension fund announced this upon request. At the same time, it admitted compliance violations in connection with the failed US real estate deals.

As BVK CEO Axel Uttenreuther told " Welt am Sonntag ," external experts identified compliance violations. These indicated an "inappropriate close relationship." The pension fund then proactively informed the Munich public prosecutor's office.

800 million euros invested in US real estate

According to "Welt am Sonntag," the BVK invested around 800 million euros in four poorly performing real estate projects in Miami and New York. As a result, real estate director Rainer Komenda also left the pension fund . He is said to have maintained contact with US real estate developer Michael Shvo. Shvo had already run into trouble with US law due to tax issues.

BVK emphasized to private banking magazine that its capital-weighted net return of 3.4 percent exceeded the interest rate requirements of the pension funds it manages. Losses in individual real estate funds have "no impact on pension benefits"; they are offset by other asset classes.

The coronavirus pandemic, high inflation, and drastically rising US interest rates have led to value adjustments in real estate developments, the BVK explained in response to an inquiry. This affects the entire industry.

New York lawsuits withdrawn

According to Uttenreuther, two lawsuits pending in New York against the BVK have been withdrawn by the plaintiffs. The BVK sees this as confirmation that there was no legal basis for the lawsuits. The public prosecutor's investigation is ongoing. The pension fund manages the pensions of millions of Bavarian civil servants and public sector employees.