DENMARK - Denmark's PenSam has announced its entry into the residential mortgage lending market, having earmarked an initial DKK1bn (€134m) to take on good-quality second-lien loans from troubled Danish banks now forced to offload them.
The DKK84bn labour-market pension fund group says the frozen money and residential property markets had opened up a good investment opportunity.
Benny Buchardt Andersen, head of investment at PenSam, said: "The lending market is so locked right now that there are many good payers out there. These are quite ordinary people with good, secure incomes, who cannot get loans because of the banks' problems. We would like to help them."
PenSam said it had provisionally set aside DKK1bn to lend as long-term fixed-rate residential mortgages in the form of mortgage bonds.
The business will be conducted via investment manager Halkin, which has set up a fund to acquire and hold second-lien mortgages in Denmark.
So far, PenSam is the sole investor in the fund.
Buchardt Andersen said he expected PenSam to get a return of 7-8% after costs including projected defaults, which he said was far better than current bond market yields.
"We have a 'first move' advantage in this market because we are not buying distressed loans, but good-quality loans from distressed banks," he told IP Real Estate.
The external investment manager Halkin will function as wholesaler, with contact to customers taking place via existing banks or property agency chains with an interest in referring customers unable to raise financing to PenSam.