ATP Real Estate, the property arm of Denmark’s DKK933bn (€125bn) statutory pension fund ATP, is focusing on its development pipeline and improving existing domestic assets as a new strategy takes shape under the leadership of CEO Martin Vang Hansen.
Having replaced his longstanding predecessor, Michael Nielsen, at the end of last year, Vang Hansen is now leading a drive to get the best possible financial and ESG outcomes from its current investments, which he believes will grow the portfolio by a fifth and add around DKK10bn to its assets total.
Vang Hansen told IPE Real Assets: “We have grown substantially in the past five, six or seven years, and what we are focusing on in 2020 – and probably 2021 as well – is building up a strong asset management function to take care of our customers as well as possible along with a strong ESG focus.”
The strategy involves top-line aspects such as optimising rent levels and property administration, and incorporating greater levels of sustainability, Vang Hansen said.
With the addition of Kenneth Olsson, who stepped into the newly-created role of CIO at the beginning of September, Vang Hansen now has his management team in place to develop the unit’s investment strategy.
Along with Olsson and Vang Hansen, the management trio includes director of property management Christian Hartmann.
“We now have a team which will have the full P&L responsibility for our properties, including the sustainability focus for our activities that we have and will increasingly have in future,” he said.
ATP Real Estate now owns 120 properties in Denmark, and focus areas in managing these assets will be understanding their energy consumption and CO2 footprints, getting data on this and monitoring levels.
“We will be working to reduce that in the next few years,” he said. “When we undertake new builds we will aim for gold DGNB certification, and for any renovation development will we aim at least a silver, acknowledging that for existing buildings it may simply be too costly to achieve higher than this,” he said.
Vang Hansen said the team will home in on each link of the value chain in its work to boost ESG standards.
“For all service functions, we will seek out socially-responsible companies that themselves live up to certain standards, and our contractors will also have to meet particular requirements regarding ESG,” he said.
Having expanded since 2016 to around DKK50bn in assets under management now from DKK34bn, ATP Real Estate now has a pipeline of around DKK7bn of development projects for which it already has or in the near future will have building permits in place.
Bringing these to completion, and the repositioning and renovation work the firm has planned, will add around DKK10bn within office, residential and hotel sectors, to the overall portfolio, Vang Hansen said.
Examples of repositioning projects being undertaken by ATP Real Estate include the large Hilton hotel it is creating from Nordea’s canal-side former office building known as the Desert Fort (Ørkenfortet), and the conversion of offices in Copenhagen’s Frederiksberg district into a Scandic hotel, which has just been finished.
Asked whether ATP Real Estate was backing off from actively acquiring new properties at home and abroad, Vang Hansen said: “Basically it’s just a fact we have these projects sitting in our bank right now and we want to develop them.
“I wouldn’t say we are focusing only on that, but we are certainly focused on development at the moment. And as always, we are ready to act if the right projects present themselves.”
Asked if demand from foreign investors was still pushing up prices in the Danish property market, Vang Hansen said this remained the case.
“It’s the same thing as is going on abroad,” he said. “Prices are very high, so we are following market developments closely. But if something pops up, we’ll give it a shot – though we are not very optimistic we can compete as equity-only buyers.”