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Nordic-Based Real Estate Investors – March 2012

by Gayatri Pillai

  • 02 Mar 2012
  • RE

Preqin presently tracks 178 active Nordic-based real estate institutional investors. Smaller investors, those with less than $1bn in total assets, comprise the majority of this group, with 37% of Nordic real estate investors falling in this category. Twenty-nine percent of the investors have total assets in the range of $1-4.9bn, while those with assets between $5bn and $9.9bn, such as SEK 60bn ($9bn) Foundation Asset Management, represent 9% of the total. The largest investors, institutions with total asset figures greater than $10bn, account for 35% of Nordic investors in real estate. These investors range in size and type, from the DKK 4,000bn ($734bn) Danske Bank, to the SEK 541bn ($80bn) Sweden-based corporate investor Vattenfall, to $15bn private sector pension fund, PenSam.

Nearly 40% of Nordic real estate investors allocate less than $100mn to the real estate asset class, while 29% have real estate allocations between $100-499mn. Thirteen percent investors based in the region allocate between $1bn and $2.5bn to real estate, such as insurance company Tapiola Mutual Pension Insurance, which has a real estate allocation of $1.6bn (or 22% of its total assets). Investors that allocate over $2.5bn to private real estate make up a further 10%.  

Value added and opportunistic fund strategies are the most popular among Nordic private real estate fund investors, with 67% and 65% employing these approaches respectively. Danish pension fund Sampension is one such investor. The DKK 120bn public pension fund, which expects to invest in two US-focused real estate funds in the next 12 months, plans to focus exclusively on value added strategies. Core and core-plus fund strategies are the next most preferred for Nordic investors, with 57% and 55% of investors favouring these investment types. Debt and secondaries strategies are the least popular with real estate investors in the Nordic region, with 14% and 9% preference rates respectively.

Breaking down Nordic investors in real estate by the ways they gain exposure to the asset class, we see that 66% of investors actively invest in private real estate fund, while a further 3% considering doing so. Twenty-seven percent of investors do not commit to these private funds. The majority of Nordic investors, a considerable 81%, are not willing to invest in listed real estate with only 16% investing in this manner. Seventy-three percent of investors choose to access real estate via direct investments.

Nordic real estate fund investors overwhelmingly prefer to invest in Europe-focused vehicles, with 88% looking to invest in these funds. Finland-based insurance company Pension Fennia is one such example. The €7bn insurance firm, which plans to commit to 1-2 real estate funds in the next 12 months, has a specific preference for core and core-plus private real estate vehicles that target Europe. Fifty-three percent of investors are interested in funds which focus on Asia and other emerging markets, while 37% of Nordic investors have a preference for North America-focused real estate vehicles.

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