STOCKHOLM-Two of Sweden’s state-owned pension funds, the First and Second Swedish National Pension Funds (AP1, AP2) are forming a joint venture with property advisor Catella to target $700 million in equity at European real estate, mainly outside the Nordic region. Former Aberdeen Property CEO Rickard Backlund has been appointed to chair the new company.
The business strategy is to invest in commercial real estate, focusing on office centrally located in major European cities, the funds said. The firm will enable both to, “establish long-term ownership of real estate on the most significant European markets.” The two funds will be joint 50-50 owners of the investment JV and have signed an agreement with Catella for support in resources, competence and expertise during the build-up phase. Alongside Backlund, a search has been launched for a CEO and other board members.
AP1 and AP2 are among five buffer funds in the Swedish national pension system, committed to “investing to maximum benefit and generating a high return at low risk over the long term.” At year-end 2010, the two managed total pension assets of $69 billion.
AP1 CEO Johan Magnusson said the JV offers a rapid and cost-efficient means of building a real estate firm to utilise knowledge in local markets. “Investments in real estate can provide us with a solid return relative to the level of risk. As long-term investors, this presents us with a promising opportunity to complement our other real estate investments in Sweden and elsewhere with a number of well chosen properties in Europe.”
Added AP2 CEO Eva Halvarsson: “This company will enable us to complement our current real estate investments in Sweden, Denmark and Germany, broadening our European portfolio.” Catella CEO Johan Ericsson said the initiative represents a new form of direct investment in foreign real estate for the funds. “It unites the capacity and financial competence of these institutions with Catella’s market know-how and market proximity, with a view to creating long-term value.”
Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.
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