PensionDanmark has sold a large residential portfolio in Copenhagen to Nordic Real Estate Partners.
The portfolio of more than 700 apartments was bought by NREP on behalf of Danish pension funds and, IP Real Estate understands, Partners Group. The latter declined to comment.
PensionDanmark, which has invested in the residential sector since 2006, sold the 73,000 sqm portfolio to allow it develop new residential projects without going over its allocation to the sector.
The pension fund is currently committed to the development of 600 homes in the next two years at Copenhagen’s Islands Brygge.
Torben Möger Pedersen, chief executive of PensionDanmark, said the sale of the portfolio would generate a “healthy profit”, while allowing it to develop new residential projects. Neither NREP or PensionDanmark revealed a price for the portfolio sale, which was the biggest recorded in Denmark this year.
The portfolio is concentrated in Copenhagen but includes properties in Aarhus Harbour, Kanalfronten in Vejle and Horisonten in Ørestad.
Improving prospects for Denmark’s residential sector were behind NREP’s decision to buy the portfolio, its chief investment officer, Rasmus Nørgaard told IP Real Estate.
The company will look to sell apartments from the portfolio over the next “seven to eight years”, he said.
Nørgaard said: “We bought at a discount to the current retail prices so we feel we can optimise returns from the portfolio. In real terms – and despite market appreciation in the last 12 to 18 months – prices are still below their peak.”
Disposable income in Copenhagen, increasing demand and low supply were all factors in NREP’s decision to invest, he added.
A report by JLL’s Danish alliance partner, Sadolin & Albæk, outlined the investment case for Denmark’s residential sector, with Copenhagen leading the recovery.
“The Copenhagen market for ownership housing is now recovering,” Sadolin & Albæk said in the report, released earlier this year.
With the Danish economy firmly on the road to recovery, the advisory firm said price recovery had been noted in some Copenhagen districts, taking some properties back to pre-crisis levels.
Copenhagen is, it added, set to see a population boom of 220,000 new residents by 2040. Development of new residential property is, it added, still “far below the pre-crisis level”.