Pension funds PFA and Industriens Pension have joined forces to invest DKK 1 billion (approx. USD 141 million) in residential properties outside the Copenhagen Region and Aarhus area, the companies announce.
The investments will be carried out via Danske Boligeejendomme (Danish Residential Properties), a fund established on the initiative of Danish property investment group Thylander Gruppen.
"The fund's purpose is to build a portfolio of residential properties outside the capital region in selected cities that have been identified as growth cities in regard to expected growth in megatrends and demography. That way, we help support a varied housing stock with attractive rental accommodations in the cities, and it's also a good source of returns for our clients," says Michael Bruun, CEO at PFA Real Estate, in the announcement.
At Industriens Pension, property investment manager Peter Frische emphasizes that the investment enters as a natural element in the company's continued efforts to build a substantial Danish real estate portfolio.
"A considerable number of cities outside Aarhus and Copenhagen are experiencing decent growth and are as such interesting from an investment perspective. We believe that with this model, we have a setup that ensures that we can provide professional management and administration of our properties in all cities. They will be low-risk investments, and they will provide stable and attractive yields to our clients," Frische says in the announcement.
Both PFA and Industriens Pension point out that this is a long-term investment that will benefit the fund partners, residents of the cities in question, and pension savers. The companies also note that the number of elderly and single people is expected to rise in times to come, and this section of the population in particular is expected to request the kind of apartments that the fund will invest in.
PFA Real Estate and Industriens Pension each own 49.5 percent of the fund Danske Boligejendomme, while Thylander Gruppen owns one percent.
Through to 2019, the fund will invest DKK 1 billion primarily in centrally located residential properties in the chosen growth cities. The two pension funds' investments in Copenhagen and Aarhus are not part of this setup.
Thylander Gruppen has commissioned the Copenhagen Institute for Futures Studies to identify 29 cities that are expected to see a positive population growth and economic development in the future.
"We are really looking forward to working with this fund, and of course we appreciate the support from investors. We have some exciting years and good investments ahead," says Carsten Viggo Bæk, partner in Thylander Gruppen, in the announcement.
English Edit: Marie Honoré