Denmark’s PKA has joined Laerernes Pension and AP Pension in backing Sparinvest Property Fund III (SPF III), which has raised a further €90m in a second closing, bringing the total raised to €243m.

There are now six investors in the fund – the first closing was last June.

SPF III, a fund of funds, will continue the global value-added investing strategy of the previous fund, SPF II, according to Bo Jensen, managing partner at Sparinvest Property Investors.

It will invest primarily in the Americas and Asia (40% of the portfolio each), with 20% in Europe, through carefully selected “hard to find” small and medium-sized managers with hands-on operating experience.

“We find good local partners to work with, as we can’t be experts all over the world,” said Jensen.

SPF III will invest only in unlisted real estate, focusing mainly on the equity quadrant.

The fund will commit to 14 managers and has already invested with four: two in the US, one in the UK and one in China.

It hopes to select a Japan and a further US manager by year-end.

The fund will maintain a prudent leverage ratio of approximately 50% loan-to-value.

Its return target is 11-13% net IRR.

Jensen said SPF II, which had its final close in June 2011, had seen a “fantastic” performance, with an IRR of 13%.

The new fund will build and reposition commercial real estate, including retail and office properties (making up 25% and 20% of its portfolio, respectively).

Residential (25% of the portfolio) will include the development of apartment blocks in India, China and South America.

Jensen said this would focus on housing for middle class and lower-income families.

“We normally don’t do luxury apartments, as it is too risky, with too much competition,” he said.

Around 15% of the fund will be in debt instruments.

PKA has now committed €60m to the fund, having committed €50m to SPF II.

Nikolaj Stampe, head of property at PKA, told IPE: “We chose the fund because we wish to invest abroad but don’t have the resources to investigate markets, especially far-flung regions like the US.

“We wanted a fund of funds to spread risk. And as Sparinvest is a Danish company, it is easy to work with them, especially in terms of taxation and auditing.”

Stampe said PKA could also increase its exposure to specific markets by making separate co-investments to funds SPF III commits to, with Sparinvest handling the day-to-day business.

PKA’s five constituent pension funds each has an allocation of 8-10% to real estate out of the total DKK200bn (€27bn) portfolio.

However, Stampe said the aim was to raise this to 10% for all five funds over the next three years, with 20% of real estate allocated to international property.

Meanwhile, there will be two further closings for SPF III, in Q1 and June next year, with a final target of €400m.