EUROPE - A joint venture between Danish investment firm Saxo and Resolution Property will treble rents on some value-added residential assets as it deploys the remaining capital for its target-DKK1.9bn (€255m) fund over the next few months.
Saxo Properties chief executive Jesper Damborg said: "The rents in these apartments are very low, and when tenants leave, we can upgrade the apartments and triple the rent - depending on what rent they are paying now."
He cited strong tenant demand for Copenhagen residential, low vacancy rates and, with Danish mortgage banks still issuing bonds, as much as 80% finance with a 30-year commitment and "very gentle" covenants.
The joint venture, set up in August last year, has already deployed DKK850m of committed capital in Copenhagen's central business district, and in districts west and north of the city centre.
The partners will invest DKK125m in the recent acquisitions, with an investment focus on income growth.
Some of the assets acquired for the joint venture by Resolution Property, a pan-European real estate fund targeting a €2.6bn portfolio, have already been sold to institutional investors, including pension schemes.
The partnership, which will have a lifespan of 3-5 years, has to date targeted residential, mixed-use and commercial assets requiring "intensive asset management", including refurbishment and tenant repositioning.
Damborg told IP Real Estate he foresaw no problems in deploying the remaining capital before the summer.
He described the Resolution joint venture as a "learning experience" for the Danish bank subsidiary.
"The learning process has been in the area of what UK investors are focusing on," he said. "They are very detailed, and everything has to have comparables."
Damborg also hinted at possible new joint ventures with UK pension schemes.
"We are, of course, in contact with a significant number of UK investors, but Resolution has priority number one, and we must see if they are prepared to expand the existing joint venture," he said.
