Meet the €700 million man. Michael Nielsen, managing director of Copenhagen-based ATP Real Estate, has just received the green light to invest that sum in unlisted real estate, joint ventures and club deals.
With the new mandate, Nielson said he expects to build a new portfolio of between 12 and 15 fund investments. However, he noted that there would be a greater focus than before on club deals and joint venture structures, rather than just committing to large funds with 10, 20, 30 or even 40 investors.
Already a significant investor in unlisted property funds, ATP Real Estate has just one sponsor – the pension fund ATP. As Denmark’s national pension scheme, every employed Dane is required to contribute to it.
The history of ATP in real estate is simple. It has been making direct investments in Danish real estate for 20 years and has built up a portfolio of seven million square feet of office and retail assets, but it only began investing indirectly in European funds in 2002. Then in 2006, it decided to create an internal fund of funds rather than invest on its balance sheet. The vehicle established was ATP Real Estate Partners I, and the commitment from its single sponsor was €1 billion.
For the last four years, ATP Real Estate has been busy investing, making commitments to 15 different funds in Europe and the US. Including commitments ATP made before establishing ATP Real Estate Partners, it has a portfolio of 31 funds and a total commitment of €2 billion.
The last commitment ATP Real Estate made was to The Townsend Group’s participation in Brookfield Asset Management’s turnaround consortium in 2010. Other commitments made through Fund I are to LaSalle Investment Management for a diversified core US strategy, to which it committed €70 million, and Heitman’s Central and Eastern European fund, to which it committed €75 million. In addition, it is “in the queue” for two other US funds.
At the end of 2010, ATP Real Estate completed its €1 billion investment programme, and the result of an agreement with the pension fund has been to create a follow-up vehicle, ATP Real Estate Partners II. The fresh €700 million commitment will be used in much the same way as the programme for Fund I, except it will climb a “little bit down the risk segment”, said Nielsen, explaining that new investments will focus a bit more on the core segment.
However, Nielsen was quick to add, “There is still room in our programme to invest in more risky products in opportunistic real estate and the value-added space.”
ATP Real Estate currently is looking into who it should invest with. “The spectrum includes sovereign wealth funds, pension funds and other solid investors that can support an investment should it suddenly need a further injection of capital,” Nielsen said. “That would be institutional investors or other pension funds.”
ATP still has no plans to invest in Asia. If it wanted to enter into a new market such as Asia, Nielson said it would want to build up experience first because it likes to be close to its investments. “I am sure that when we fully establish our programme in three years’ time, we will consider Asia again,” he added.
Nielsen declined to say what the first few commitments for the new programme would be, but he noted that ATP Real Estate would make two or three commitments this year. As far as the performance of existing investments, he said ATP knew when it entered into a fund with a period of 10 years that there would be cycles where performance went up and down. He declined to elaborate further.