Core Capital

KIRKBI’s Core Capital investment portfolio showed a negative return in 2022 impacted by the development in the financial markets

The Core Capital investment portfolio with a total value of DKK 90 billion at year-end 2022 delivered a negative return of DKK 3.7 billion in 2022, equal to -4.1 % (2021: 23.3 %). The return was impacted by challenging markets characterised by significant political and macroeconomic uncertainty, resulting in increased interest rates.

KIRKBI maintained focus on the long-term value creation, and the portfolio demonstrated resilience compared to the performance in most larger equity indices. So while the actual return for 2022 in itself is disappointing, it compares favourably to market benchmarks. The same applies for the 10-year average annual return of 7.7 %.

Long-term Equity

The Long-term Equity portfolio comprises significant minority stakes in listed and privately held companies as well as funds to increase KIRKBI’s exposure to investments compounding value over longer holding periods.

In 2022, KIRKBI updated its Long-term Equity investment strategy to focus on sectors that are closely aligned to KIRKBI’s mission, targeting growing companies with tailwind from global trends. Going forward, KIRKBI intends to focus its Long-term Equity portfolio around three sectors:

• Sustainability: Companies whose products, services, or solutions contribute to limiting resource waste or reduce emissions

• Healthcare: Businesses that contribute to making healthcare and life science more efficient, of higher quality, or more accessible

• Education & Play: Companies offering playful or innovative services, software, content, and other key elements of the education ecosystem

During 2022, the existing portfolio was to a large degree negatively impacted by the war in Ukraine, increased raw material prices, high inflation rates, and rising interest rates.

Below is set out the Long-term Equity portfolio at year-end 2022.

Long-dated US equity funds focused on majority investments in primarily US based companies

Private Equity

The Private Equity portfolio is comprised by buy-out funds and co-investments with an objective to generate long-term attractive returns. In addition, the Private Equity Portfolio provides diversification across industries and geographies as well as access to opportunities in the private market that are not in the scope of the Long-term Equity portfolio.

Quoted Equity

The Quoted Equity portfolio is comprised by investments in high-quality listed companies and external managers across industries and geographies. The primary objective of the portfolio is to provide attractive long-term returns and to serve as provider of liquidity for KIRKBI and related entities as well as diversification of the overall Core Capital portfolio.

Real Estate investments

The main objective of KIRKBI’s Real Estate portfolio is to provide long-term stable returns through sound and high-quality properties as well as by looking at redevelopment opportunities with a high sustainability and long-term value potential, mainly in the office sector.

Geographically, the 27 investment properties in the portfolio are located in:

• Copenhagen, Denmark

• London, England

• Munich, Germany

• Hamburg, Germany

• German-speaking part of Switzerland

In 2022, KIRKBI took over two commercial properties in Copenhagen with a total of 13,700 sqm, one in the city centre and one in an adjacent area with strong demographic growth. The latter represents the new strategy to identify opportunities also outside the city centre. Energy optimisation measures were implemented after take-over of the buildings.

During 2022, one property in Denmark and one in Switzerland were recertified to DGNB Gold, while a property in London obtained a BREEAM.

Fixed Income

The Fixed Income portfolio serves as a source of cash management and adds less volatile and cyclical elements to the overall portfolio relative to equity investments.

New Heimeran office complex in Munich

The modern office complex at Ridlerstrasse 35B-37 in Munich, Germany was completed in November 2022 and will be handed over to KIRKBI in January 2023. Currently more than 80 % of the lettable space has been pre-let.

The complex comprises a total of 30,000 sqm. It includes 24,800 sqm of offices in the upper floors of a 14-storey tower and two low-rise buildings.

The property will be DGNB Gold certified and is expected to be inaugurated during first half of 2023.