Danish investors set up European debt club fund

Five Danish pension funds will invest in commercial real estate loans in western Europe through a club fund managed by AXA Real Estate.

AP Pension, Sampension, TDC Pension, JØP and DIP will invest DKK3.6bn (€480m) in property debt over the next two years.

Erik Hallarth, head of investments at AP Pension, said the club approach would lead to lower costs and better returns for each of the five investors, but would also provide the necessary scale.

“There are exciting prospects, and to get that you need to have volume in order to make a sensible entry into the European commercial real estate loans market,” he said.

“In this way, the joint venture will make something possible that we couldn’t do alone.” 

AP Pension said its portion of the overall investment would be DKK750m.

The pension provider said it was gradually going down alternative routes in order to create reasonable investment returns for its customers.

Most recently it had invested in the agricultural sector through the launch of a DKK600m fund, and now another opportunity had presented itself, it said.

Entering the European property investment had now become attractive, AP Pension said, because the financial crisis seemed to be over and there were clear signs that European growth was returning.

“Cooperation between the five pension funds makes it possible to go in the European real estate market with a loan amount large enough to match the best private lending opportunities offered by Europe’s banks,” it said.

AXA Real Estate last year agreed a joint venture targeting a similar geographical area with the Norwegian Government Pension Fund Global, marking the sovereign fund’s first investment in real estate loans.