The property investment arm of Denmark’s DKK700bn (€93.7bn) statutory pension fund ATP has reported a rise in its net annual return of more than 2 percentage points in 2015, to 8.8%, with both direct returns and capital gains increasing over the year.
As the pension fund released its 2015 financial results, ATP Real Estate said its net return was DKK2.8bn (€375m) for the year, or 8.8%, up from DKK1.9bn, or 6.7%, in 2014.
ATP Real Estate said direct returns and capital gains increased over the year, and that it had seen increasing real estate values in all of its markets but mainly in the US.
Michael Nielsen, chief executive at ATP Real Estate, told IPE: “We have had a very good year in terms of return – we have had a rather low risk portfolio, and we have generated a return of close to 9%, which is very satisfactory.”
That the property investment division was able to increase its return on last year was due to a combination of a good cash return and rising market values, he said.
Nielsen said the best return on real estate was the one that came back in cash.
“Our cash return is closely linked to occupancy, so we try to keep occupancy at a high level to generate cashflow,” he said.
ATP Real Estate is a buy-and-hold investor, he said, and as such, has not sold many assets to produce the 2015 return.
In fact, it only sold one during the year.
As a real estate investor, he said it was necessary to be disciplined within the strategy and always try to keep risk as low as possible.
“Last year, we had a return of close to 7%, but I’m not sure we will be able to keep increasing that,” Nielsen said.
“We prefer to deliver a stable return.”
By the end of 2015, ATP Real Estate’s portfolio increased to DKK34.6bn from DKK31.3bn a year before, according to the data.
During the year, it acquired the Waterfront Shopping Centre in Bremen in Germany for DKK1.6bn.
It also invested DKK900m in two London hotels via a joint venture with AXA, but, as the deal closed in January this year, it was not included in ATP’s 2015 figures.