Lego billionaires are buying out London real estate
Despite Britain’s plan to exit the European Union, the $16 billion fund based in western Denmark, bought the Porter’s Wharf office property in London’s King’s Cross district, marking its third real estate investment in the U.K. capital. This fund is managing the wealth of the billionaires who own Lego A/S, wanting to buy more London real estate.
The fact that the fund wants to add more UK real estate to its portfolio, is reflecting a bet that Britain’s departure from the European Union might make the London property market more accessible. And the fund is big enough to sit out the short-term jolts stemming from the uncertainty surrounding the U.K.’s departure, preferring to acquire properties it can develop.
Lego is hopeful they will do more in 2018, looking at Germany, Switzerland and the U.K. The 2018 uncertainty means that some investors will be able to make good long-term investments. The Kirkbi Fund Chairman Kjeld Kirk Kristiansen, the grandson of Lego founder Ole Kirk Kristiansen, is Denmark’s second-richest man thanks to the popularity of the plastic bricks that have long been a staple of children’s toy boxes. According to the Bloomberg Billionaires Index, he is worth about $5.3 billion. Currently, the fund has almost $1 billion in its real estate portfolio.
Kirk Kristiansen recently handed more control to his children Agnete Kirk Thinggaard, Sofie Kirk Kristiansen and Thomas Kirk Kristiansen, who each have a fortune of about $4.9 billion. The fund also owns properties in Denmark, but does not see much potential for more investment there in the near term. The property market in Copenhagen has seen a lot of demand, so it is difficult to find projects that will give the desired returns.
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. Kirkbi’s stock investments might get a bit opportunistic this year when it comes to property acquisition. Rising interest rates and possibly also higher inflation due to pressure on labor markets in the U.S. and western Europe creates more volatility in stock markets.
For investors it means that previously looked at companies have come down to a price level where they become attractive for investment. 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 UK Property Fund.
Photo via Wikipedia Commons / Arto Alanepaa