Swedish pensions buffer fund AP3 is taking a first step into the residential property market forming a joint venture to invest in domestic residential property with listed real estate firm Balder.
Kerstin Hessius, chief executive of the SEK304bn (€32.7bn) Gothenburg-based pension fund, said: “We see good opportunities in developing our Swedish property portfolio with residential together with Balder, a well-established company in the sector.”
She said the strong population growth expected in Sweden meant there was a big need for more provision of residential accommodation.
Although AP3 holds more than 13% of its assets, or SEK41.1bn, in real estate, so far it has never invested in the residential sector.
AP3 said it had no fixed target for investment through the joint venture, and that the amount it invested would depend on the investment opportunities presenting themselves.
The joint venture will see Balder and AP3 investing equally and having equal ownership of the assets.
The new residential company will focus mainly on producing rental properties in growth areas within Sweden, including the country’s three metropolitan regions, as well as other areas where the population is growing.
It said the property development would concentrate on being environmentally friendly.
Erik Selin, chief executive at Balder and its main owner, said it was important for the company to co-invest with a player such as AP3, which, like Balder, took a long-term view on investment.
“The constellation becomes strong and opens up many possibilities,” he said.
In other news, Danish labour-market pension fund PensionDanmark is buying commercial properties in the cities of Aalborg and Copenhagen.
The DKK171bn (€22.9bn) pension fund has bought a 7,000sqm property in Aalborg and a 26,000sqm property in the Østerbro district of Copenhagen.
The Aalborg property was bought from real estate firm Nordjyske Ejendomme, and the Østerbro building was sold by Danske Bank.
PensionDanmark did not disclose the value of the deals.
The largest tenants of the buildings include the Appeals Board (Ankestyrelsen), as well as corporates Egmont and Danske Bank.
Karsten Withington Brink, deputy director at PensionDanmark, said: “We are continually working to expand our portfolio with well-located commercial properties with solid tenants on long leases.”
The pension fund made two other property investments in Aalborg recently – Alfa Laval’s new headquarters and the building housing IT firm KMD.