DENMARK 鈥� Denmark鈥檚 PKA has joined Laerernes Pension and AP Pension in backing Sparinvest Property Fund III (SPF III), which has raised a further 鈧�90m in a second closing, bringing the total raised to 鈧�243m.
There are now six investors in the fund 鈥� the first closing was last June.
SPF III, a fund of funds, will continue the global value-added investing strategy of the previous fund, SPF II, according to Bo Jensen, managing partner at Sparinvest Property Investors.
It will invest primarily in the Americas and Asia (40% of the portfolio each), with 20% in Europe, through carefully selected 鈥渉ard to find鈥� small and medium-sized managers with hands-on operating experience.
鈥淲e find good local partners to work with, as we can鈥檛 be experts all over the world,鈥� said Jensen.
SPF III will invest only in unlisted real estate, focusing mainly on the equity quadrant.
The fund will commit to 14 managers and has already invested with four: two in the US, one in the UK and one in China.
It hopes to select a Japan and a further US manager by year-end.
The fund will maintain a prudent leverage ratio of approximately 50% loan-to-value.
Its return target is 11-13% net IRR.
Jensen said SPF II, which had its final close in June 2011, had seen a 鈥渇antastic鈥� performance, with an IRR of 13%.
The new fund will build and reposition commercial real estate, including retail and office properties (making up 25% and 20% of its portfolio, respectively).
Residential (25% of the portfolio) will include the development of apartment blocks in India, China and South America.
Jensen said this would focus on housing for middle class and lower-income families.
鈥淲e normally don鈥檛 do luxury apartments, as it is too risky, with too much competition,鈥� he said.
Around 15% of the fund will be in debt instruments.
PKA has now committed 鈧�60m to the fund, having committed 鈧�50m to SPF II.
Nikolaj Stampe, head of property at PKA, told 麻豆映画: 鈥淲e chose the fund because we wish to invest abroad but don鈥檛 have the resources to investigate markets, especially far-flung regions like the US.
鈥淲e wanted a fund of funds to spread risk. And as Sparinvest is a Danish company, it is easy to work with them, especially in terms of taxation and auditing.鈥�
Stampe said PKA could also increase its exposure to specific markets by making separate co-investments to funds SPF III commits to, with Sparinvest handling the day-to-day business.
PKA鈥檚 five constituent pension funds each has an allocation of 8-10% to real estate out of the total DKK200bn (鈧�27bn) portfolio.
However, Stampe said the aim was to raise this to 10% for all five funds over the next three years, with 20% of real estate allocated to international property.
Meanwhile, there will be two further closings for SPF III, in Q1 and June next year, with a final target of 鈧�400m.
