Five Danish pension funds are joining forces to invest DKK3.6bn (€480m) in commercial real estate loans in western Europe in conjunction with AXA Real Estate.
Commercial labour-market pension provider AP Pension said it and fellow labour-market pension funds Sampension, TDC Pension, the pension fund for lawyers and economists (JØP) and the Danish engineers’ pension fund DIP would invest DKK3.6bn over the next two years.
The investment would be made in a newly established investment fund, it said, set up in conjunction with AXA Real Estate, which it said was the largest manager of property loans in Europe.
Erik Hallarth, head of investments at AP Pension, said that he was pleased with the new cooperation between the funds.
“There are exciting prospects, and to get that you need to have volume in order to make a sensible entry into the European commercial real estate loans market.
“In this way, the joint venture will make something possible that we couldn’t do alone,” he said.
Working together with the other pension funds would lead to lower costs and secure a better return for each partner in the fund for the benefit of their customers, Hallarth said.
AP Pension said its portion of the overall investment would be DKK750m.
The pension provider said it was gradually going down alternative routes in order to create reasonable investment returns for its customers.
Most recently it had invested in the agricultural sector trough the launch of a DKK600m fund, and now another opportunity had presented itself, it said.
Entering the European property investment had now become attractive, AP Pension said, because the financial crisis seemed to be over and there were clear signs that European growth was returning.
“Cooperation between the five pension funds makes it possible to go in the European real estate market with a loan amount large enough to match the best private lending opportunities offered by Europe’s banks,” it said.
AXA Real Estate last year agreed a joint venture targeting a similar geographical area with the Norwegian Government Pension Fund Global, marketing the sovereign fund’s first invetsment in real estate loans.