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Danish pension fund gains DKK350m on real estate sales

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The Danish pension fund for pharmaceuticals assistants, Pensionskassen for Farmakonomer, is selling 12 properties to a collective fund run by Danish property administrator DEAS as part of its strategy of divesting direct real estate holdings.

The DKK10bn (€1.3bn) pension fund said it sold the 12 properties, which include 466 rental units, to real estate fund DEAS Invest I, releasing DKK350m the scheme will use for new investments that provide a better return.

“The collective property fund has, at the same time, the opportunity to borrow against homes at an interest rate that is currently very low,” the pension fund said.

Pensionskassen for Farmakonomer has already announced its intention to sell off all real estate holdings over the course of this year, putting the proceeds into a fund.

The property fund is jointly owned by several pension funds including Sampension KL Livsforsikring and PKA, and now holds more than 929 rental properties within 20 buildings, mostly located in the Copenhagen region.

In connection with the deal, which took effect on 1 January, Pensionskassen for Farmakonomer said it bought shares in the collective fund.

Members of the pension scheme will retain the right to rent some of the properties, now indirectly owned by the scheme, it said.

Peter Bache Vognbjerg, chief executive of the pension fund, said it had been important for the pension fund to keep hold of this right for its members.

The pension fund said the transition of its properties to the jointly owned fund would have no impact on current tenants of the buildings, although it said tenants in some of the properties had offered to buy their property as cooperative housing.

“Of course we hope the fund in the long term will have several properties when hopefully more institutions choose to enter into it with their properties,” Bache Vognbjerg said.

He said in November that, when the fund did sell its property holdings to the collective fund, it would receive half of the proceeds of the sale in cash and become 50% owner of the fund itself.

He added that, within the risk budget, real estate had too high a weight, was considered too illiquid, and that too much was needed in terms of capital.

The fund took the first step in realising its plan in November last year, selling four residential properties in Aarhus, going ahead early with the sale because of a good offer it received.

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