Deutsche Finance International (DFI) has launched of a Danish Micro Living strategy, which is targeting the aggregation of a €300m portfolio. The strategy, which is DFI’s first in this sector, aims to bridge the significant supply-demand imbalance for high-quality affordable homes in Denmark’s capital and help address the wider macro environment issue of a slowdown in the supply of rental accommodation. DFI aims to create a market-leading, branded platform that benefits from tech-enabled operational efficiencies, as a first mover in Denmark.
Micro living comprises small, self-contained homes for rent that are purpose-built and professionally managed with a combination of personal and shared amenity space. Micro living provides residents with an attractive combination of their own secure, modern accommodation and the benefit of a sense of community with those sharing the wider facility. This latest strategy builds on the success of the Blaekhus platform, which was established by DFI in 2018 and became the largest student accommodation portfolio in Denmark, comprising 1,186 units across seven assets primarily located in Copenhagen. Blaekhus was sold to Patrizia earlier this year for €314m.
DFI has launched the platform with the off-market acquisition of a €100m development (structured as forward funding) in Copenhagen from a local developer. Scheduled for completion in the second half of 2024, the asset will comprise 350 rental units, each with its own bathroom and kitchenette, as well as a coffee shop, gym and a number of communal study rooms, lounges and kitchens. The project prioritises environmental and social considerations, targeting a DGNB Gold certification while offering attractively priced premium accommodation with rents below the cost of renting a typical one-bed unit in the city.
Francesco Orofino, Vice President at DFI, commented: “This acquisition kickstarts our micro-living strategy in a market we understand well. The Danish living sector benefits from significant tailwinds, including a substantial undersupply and a structural shift in favour of rental housing versus home ownership, driven by stricter mortgage regulatory requirements and affordability constraints that are at the front of potential occupiers’ minds in the current economic environment. This asset is well located in an emerging district of Copenhagen with great transport connectivity and we look forward to building out this platform further.”
Paul Nearchou, Managing Director at DFI, added: “At DFI, we have a strong track record of building consumer-centric operating platforms in asset classes supported by long-term, robust structural demand in order to maximise liquidity and create value. With Blækhus we successfully assembled and exited the leading student accommodation portfolio in Denmark and we are aiming to utilise that experience through the execution of our new Danish strategy. The current market backdrop and likely associated re-pricing presents us with an exciting opportunity to capitalise on the market cycle and utilise our experience investing in the Danish residential sector to deliver attractive returns on behalf of our investors.”
