DENMARK - Industriens Pension, the e4.5bn Danish pension fund for blue collar workers, is looking to build up its property portfolio through investments in real estate funds in the Nordics and Europe.
Jan Østergaard (pictured), head of investments, said: “We are looking to build up our real estate portfolio in the same way that we have our private equity. The original idea was to start building a portfolio of commercial domestic properties, but it seems that a lot of our peers had the same idea at the same time, and increased their investments in Danish property so it’s been quite difficult for a newcomer to enter that asset class.
“Now we think we should increase our efforts to look outside Denmark and that will be indirect, via real estate funds.”
The fund’s exposure to private equity stands at 2.5% of total assets, however the long- term target is 5%. Five years ago, Industriens Pension began investing in private equity fund of funds before deciding to bring the portfolio in-house to reduce costs.
“We think we should enter the real estate market in much the same way; instead of having real estate experts in-house, we should use the expertise and intuition of real estate funds,” Østergaard added.
“From the beginning we will probably go into focused funds and limit the universe to the Nordics and Denmark. The US could be the next step.”The fund’s long-term target for real estate is 5% of total assets, but Østergaard said in the short term, the fund would aim for 2.5%.
The board is expected to make a final decision on the move before year-end.Industriens Pension’s asset allocation is: 37.1% domestic nominal and index bonds, 20.3% foreign bonds including nominal and high yield corporate, 5.8% emerging market bonds, 0.2% real estate, 22.2% foreign listed equities, 10.3% Danish listed equities, 1.9% private equity and 2.2% cash.
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