Denmark’s Pensionskassen for Farmakonomer – the pension fund for pharmaceuticals assistants – has sold four residential properties in Aarhus as a first step in selling off all its direct real estate holdings.

Because of the high capital requirements for the asset class, the fund plans to sell all real estate within the next year, putting the proceeds into a fund.

Peter Bache Vognbjerg, the labour-market pension fund’s chief executive, told IPE: “Within our risk budget, real estate had too high a weight, and it had to have too much in terms of capital.”

The asset type was also considered too illiquid, he said.

“We are a small pension fund and expect to sell all our real estate in the next year,” Bache Vognbjerg said.

The pension fund – which has total assets of around DKK9.5bn (€1.3bn) – sold all four of the residential properties it owns in the city of Aarhus.

The fund said property generally produced low levels of return and that the money could attract a better return if invested differently.

Bache Vognbjerg said it had gone ahead early with the sale of the four buildings because it had received a good offer it could not refuse.

The parties have agreed not to disclose the value of the sales.

The pension fund’s overall real estate holdings – which currently total around DKK600m in value before the latest sale of four buildings – will be sold, with the proceeds ploughed into a real estate fund in cooperation with two other pension funds, Bache Vognbjerg explained, declining to name them.

Pensionskassen for Farmakonomer will then receive half of the sale value in cash and be 50% owner of the fund itself.

The pension fund outsources all of its asset management but does risk management in-house.