Although philanthropic organization Realdania was created to support charitable projects, particularly those involving buildings and urban development, just a very small portion of the association's wealth is invested in real estate.
Of Realdania's total AUM of EUR 3.1 billion (DKK 23.5 billion), just EUR 112 million (DKK 835 million), equating to 3 percent, is invested in real estate.
During this strategy period, which ends in 2026, that figure will be increased to 10 percent, says CEO Jesper Nygård. This equates to an annual increase of a few hundred million Danish kroner.
"The new investment strategy consists of three new elements, and one of them is that we will move in a more illiquid direction - that includes both private equity and real estate," Nygård says.
The announcement as Realdania released its year-end report for 2019.
After a bad investment year in 2018, the association reported that EUR 160 million (DKK 1.2 billion) was donated to charitable projects - the highest amount since 2007.
Divestments leave a gap
In 2016, Realdania sold its 25 percent ownership share in construction project Carlsberg Byen in Copenhagen. In 2015, the company sold its ownership share of Danish real estate investment company Dades.
"After selling Carlsberg Byen and Dades, we have a portfolio that needs to be built up again. I can't say what we will do exactly, but I can say that we are building it up, and it will be built up further in 2020. Just as on our philanthropy side, we invest on a long-term basis and with very thorough processes in place," says Nygård.
Real estate investments on the commercial side will happen on a global level to spread the risk associated with property, as Realdania already has significant exposure to the Danish real estate market through its philanthropic investments, Nygård explains.
He cannot reveal whether the future investments will be in development projects or finished properties, however, or whether they will be offices, logistics properties or residential real estate units. He can only say that the investments will be made abroad:
"We already have Danish real estate, so to ensure that we are spreading risk across locations, we will look abroad. But we also want to ensure a spread across sectors and age. So it isn't just an either/or question - we want to include everything. Diversification is a key word when we invest. And that also applies to real estate.
" Through subsidiary By & Byg, Realdania has made philanthropic investments in historic properties and urban development projects worth around EUR 468 million (DKK 3.5 billion) in Denmark.
This post originally appeared on AM Watch.
