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Swedish buffer funds launch property investment company

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SWEDEN - AP1 and AP2, two of the four Swedish national buffer funds, have formed a joint company in association with property specialist Catella to invest in European real estate.

The AP funds said the formation of the company would enable both funds to "establish long-term ownership of real estate on the most significant European markets".

The strategy will be to invest in commercial real estate, focusing on office premises centrally located in major European cities.

The two funds will be joint and equal owners of the new company, which will have a total equity capital of €500m.

The two funds have signed an agreement with Catella, securing its support in terms of resources, competence and expertise during the build-up phase of the new company.

Rickard Backlund, former chief executive at Aberdeen Property Investors, has been appointed chairman.

Work on appointing other members of the board, as well as the chief executive, has already started.

Johan Magnusson, chief executive at AP1, said real estate could provide 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," he said.

"This offers a rapid and cost-efficient means of building up a real estate company that through its investments can utilise knowledge of the local markets."

Eva Halvorsson, chief executive at AP2, added: "This company will now enable us to complement our current real estate investments in Sweden, Denmark and Germany, broadening our European portfolio.

"It will enhance the fund's overall investment focus and is expected to generate a robust and stable return over the long term.

"The form of collaboration chosen provides us with a tailored investment solution that, among other things, is grounded in a shared long-term investment objective and joint requirement of cost-efficient portfolio management."
 
At year-end 2010, the two funds had assets of around SEK440bn (€49bn) under management.

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