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Denmark’s PFA buys €100m secondary portfolio

Non-traditional buyer steps in to buy a limited partner position in Nordic Real Estate Partners’ logistics fund from Swedish pension fund SPP.

PFA, Denmark’s largest private pension fund, has emerged as the buyer of a €100 million limited partner interest in Nordic Real Estate Partners’ industrial fund in a further example of a non-traditional buyer of secondaries stepping up activity in the space.

PFA, which recently decided to diversify its portfolio internationally, acquired the stake at net asset value – that is, without any discount – from Swedish pension fund SPP, which has decided to wind down its indirect portfolio because of Solvency II capital requirements. In a statement, the parties to the deal said the total value of the transaction was SEK854 million, including undrawn commitments.

The fund in question was launched by Nordic Real Estate Partners (NREP) in March 2010 and contains 25 prime logistics assets in Sweden, Denmark and Finland with a current value of SEK3.6 billion (€415 million; $556 million) and is slated to reach SEK4 billion when fully invested.

Michael Bruhn, managing director of PFA Real Estate, said: “This investment fits very well with our overall strategy of increasing our international indirect real estate exposure. NREP has a unique portfolio of prime logistics assets in the Nordics, and its high and stable cash flow is very attractive in today’s market environment.”

The pension fund is under-allocated to real estate with around 5 percent of assets in property. On March 1, the pension decided to increase this allocation to 10 percent.    

Custor Capital, the Nordic-based advisory firm led by Tomas Otterud and Anders Åström, said there had been “a lot of interest in the stake” and that bidders originated from the Nordics as well as other parts of Europe and North America. “This transaction proves there is a solid secondary market for indirect investments in high-quality funds. I am confident this is a good transaction for both parties,” said Otterud.

The deal comes hot-on-the-heels of one of the largest secondary deals seen in the US, again with the buyer being a non-secondary specialist and the transaction taking place near net asset value. As PERE revealed last week, the New Jersey Division of Investment has agreed to sell $925 million worth of stakes in real estate funds to a partnership between NorthStar Realty Finance, NorthStar Real Estate Income Trust and funds managed by Goldman Sachs Asset Management.

Of the Nordic transaction, Marita Loft, the chief executive of Storebrand Properties, which is the manager of SPP’s real estate portfolio, said: “We are very pleased with being able to transact with such a professional and qualified investor as PFA. This is a high performing fund managed by a very professional team.”

Rickard Dahlberg, co-founder and chief investment officer at NREP, said he was proud to replace “such a high profile investor as SPP with another of equal standard.”

PS: Be sure to catch the our Nordic roundtable discussion in the July issue of PERE, where Dahlberg and Otterud discuss the market alongside Johan Bergman, chief executive officer of Niam; Tomas Svensson, portfolio manager, real estate at Swedish buffer fund Första AP-fonden, otherwise known as the First Swedish National Pension Fund; and Tonny Nielsen, head of investment management for the Nordic & Eastern Europe at Aberdeen Asset Management.