Sweden’s KPA Pension has bought a large office property in central Stockholm from Nordic real estate investor Areim for SEK4.3bn (€403m).
In addition, Swedish pensions and insurance group Folksam – KPA’s parent company – has announced an increas to its expansion target for its overall real estate portfolio to SEK20bn over the next few years, after it previously announced a target of SEK10bn. The figure includes KPA Pension’s assets.
Michael Kjeller, Folksam’s head of asset management and sustainability, said real estate offered risk diversification to the group’s total asset portfolio, meaning it had been able to increase the return without affecting the level of risk.
“However, we still have a need for investment, which is partly due to large net inflows of insurance premiums, and it is against this background that we are setting our new expansion target,” he said.
The office property KPA Pension is buying is located at Brädstapeln 16 in Stockholm’s Kungsholmen district. It comprises 36,700sqm of leasable space and was originally built for Swedish non-life insurer Trygg Hansa in 1975.
KPA, which runs local authority pensions, said the real estate deal was the third largest ever completed in Sweden. Chief executive Britta Burreau said it increased the property proportion of the fund’s portfolio to 9.2%, up from 7%.
KPA Pension said ownership of the property would come into its hands on 1 November.
Folksam said it had purchased SEK17bn of properties, including KPA Pension’s latest acquisition, since it began the expansion of the portfolio in 2016. The market value of its real estate portfolio stood at SEK43bn following the Kungsholmen purchase.