London Real Estate Targeted by Man Running Billionaire Lego FundBy
Brexit gives opportunities in U.K. properties, Kirkbi CEO says
Fund has the means to invest when others may shy away: CEO
The $12 billion fund that manages the wealth of the billionaire family behind Lego A/S wants to add more U.K. real estate to its portfolio, reflecting a bet that Britain’s departure from the European Union might make the London property market more accessible.
“We need to keep finding targets for investments and we feel that Brexit can give some opportunities at attractive prices,” Soren Thorup Sorensen, the chief executive officer of Kirkbi A/S, said in an interview. “For example, London’s property market.” The fund has almost $1 billion in its real estate portfolio.
U.K. Prime Minister Theresa May will on Wednesday release the trigger on two years of official talks to leave the EU. The pound has lost about 12 percent against the euro since Britain voted in favor of Brexit in June, amid concerns businesses will face trade barriers if talks hit hurdles. Britain’s property market has also been affected, with owners of prime real estate in London struggling to find buyers.
“There is uncertainty as it’s not clear which agreements will be in place once the U.K. leaves the EU,” Sorensen said. “Uncertainty is always bad for investments, but on the other hand, we have the financial strength which allows us to dare to take advantage of the opportunities that arise.”
Other institutional investors in Scandinavia have also taken an opportunistic approach toward London’s property market following Brexit. Norway’s sovereign wealth fund, the world’s biggest of its kind, pounced on an Oxford Street asset about two weeks after Britain voted to leave the EU, spending 124 million pounds ($156 million) on a retail and office property it bought from the Aberdeen U.K. Property Fund.
Kirkbi, based in the western Danish city of Billund, had total assets of 85.7 billion kroner ($12.5 billion) at the end of 2016 and made a net profit of 13.3 billion kroner, slightly down from a year earlier. Its property portfolio, which besides London includes real estate in Denmark, Switzerland and Germany, was worth about 6.4 billion kroner at the end of 2016, according to its annual report published Tuesday.
“We have no plans to sell the real estate we have and we are looking at new possibilities” in London, Sorensen said. “We feel relatively secure about the investments we have made and we also dare to look are more investments.”
Kirkbi Chairman Kjeld Kirk Kristiansen, the grandson of Lego founder Ole Kirk Kristiansen, is Denmark’s richest man, worth about $10.4 billion, according to the Bloomberg Billionaires Index. Kirkbi’s main assets are a 75 percent stake in closely held Lego as well as the toymaker’s trademarks. It also has a 30 percent stake in Merlin Entertainments Plc (which operates the Legoland parks), stakes in Danish firms ISS A/S and Falck A/S as well as other stocks and bonds, including some from the U.K.
“Brexit impacts our investments in more than just one way,” Sorensen said. “Looking at Merlin, if the pound falls, it will drag down the profits we get, but on the other hand, a cheaper pound may draw in more visitors to the U.K. where Merlin has a lot of attractions. It’s complex.”