Danske Bank Group subsidiary Danica Pension has hired former Patrizia Multi Managers associate director Jakob Kaer Nielsen to the position of chief portfolio manager.
Nielsen, who started at Danica last week, will oversee the Lyngby, Denmark-based pension’s foreign real estate investment portfolio. The new position was created to take on the foreign real estate responsibilities that previously fell under managing director and head of real estate André Scharf. Currently, Nielsen does not have a foreign real estate team that works under him, but that may change with the growth of the foreign real estate portfolio, Nielsen said. Danica currently has 12 people overall on its real estate team.
As of December 31, 2018, Danica, with the inclusion of the recently acquired Swedish SEB Pension, had approximately DKr 30 billion ($4.54 billion; €4.02 billion) invested into real estate. Foreign real estate investments in the fourth quarter of 2018 represented a net asset value of DKr 2.5 billion.
Nielsen, who previously spent more than seven years at Patrizia, says he decided to join Danica Pension after he saw the institutional investor acquire the Danish businesses of Swedish SEB Pension fund in early 2018. The acquisition resulted in the foreign real estate portfolio doubling in size and total assets under management growing by DKr 750 million. The position offered to him was also attractive given the development potential for the portfolio, he said.
He believes the responsibilities that come with the new role of chief portfolio manager will be similar to the duties he handled at Patrizia. As part of that firm, Nielsen focused primarily on the US and European markets, and held the responsibilities of sourcing and executing fund investments. He spent much of his time on portfolio management, sourcing, acquisitions and managing relationships with investment managers. The largest difference between the two roles might be that Patrizia had a focus on value-add investments and that Danica, like most institutional investors, tends to be more core-heavy in allocations, Nielsen added.
The existing Danica real estate portfolio has been built up over approximately the last five years, and after the SEB pension acquisition, its total investable real estate commitment has grown to DKr 2.5 billion, Nielsen said. It can commit to 16 different real estate investment managers within the portfolio, he added. Alongside investments in the traditional property sectors of office, retail, multifamily and logistics, Danica currently has allocations to student housing and real estate debt strategies. Like most institutional real estate investors, the portfolio largely consists of core properties and is rounded out by some value-add strategies.
“There is no doubt that Danica’s intention is to grow the international real estate exposure,” Nielsen said.
But despite the demand for more international real estate, Nielsen is acutely aware of concerns about a potential downturn with both the global economy and real estate prices currently at a peak. He acknowledged that core real estate in particular is fully priced or is close to fully priced in some markets. Therefore, the pension does not want to set any quantitative goals around real estate AUM growth at the moment, Nielsen said, adding that as long-term hold investors, Danica can sit through a cycle if needed and there should be room to invest in a variety of real estate strategies and property types.