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Varma invests in Swedish residential real estate, reorganises holdings

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  • Helsinki, Finland

Varma is investing in Swedish residential property developments through the Aros Bostad III joint venture fund as part of its efforts to geographically diversify its real estate portfolio.

The Finnish pension insurer, which holds property assets of €4.3bn, is partnering Swedish developer Aros Bostadsutveckling to invest in greenfield developments, as well as conversion projects in the Greater Stockholm area.

Varma is a lead investor in the new fund, along with Gamla Livförsäkringsbolaget SEB Trygg Liv and SEB Pensionsstiftelse.

Ilkka Tomperi, Varma’s investment director responsible for real estate, said Varma intended to increase international diversification of its real estate portfolio in the coming years.

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The fund has raised a total of SEK600m (€66.3m), he said, but declined to give a figure for Varma’s individual investment in the fund. 

He said the new investment in Sweden was a good example of a structure that worked well for Varma.

“Our desire is to invest alongside with experienced local partners,” he added.

Tomperi said the investment represented a reactivation of Varma’s international diversification strategy, not having invested outside Finland recently.

The company currently has around €300m invested in its international private equity real estate portfolio, with most of the holdings in Europe and some in Asia.

“We are the largest private real estate investor in Finland, so it makes sense to invest outside Finland as well,” he told IPE.

Separately, Varma said it was selling 22 logistics and industrial properties to a new investment company, which it would then partly own.

The new logistics and industrial real estate investment company, Certeum, will be 38% owned by Varma, 38% owned by listed property company Sponda and also partly owned by Finland’s State Pension Fund (VER).

Sponda, which was formed by Bank of Finland in 1991 to take over the real estate of collapsed Skopbank Group, is selling 12 logistics properties as well as shares in real estate funds to the new company.

Other shareholders in Certeum will be existing unitholders in the three real estate investment funds Sponda was including in the deal – SF I, SF II and SF III, Sponda said. 

Varma itself is a shareholder in funds II and III.

Sponda said it was selling the 12 assets for €216.7m, but Varma gave no specific figure for the sale price of the 22 properties it is selling to the new company. 

In all, Certeum will take €920m of properties.

Tomperi said Varma was taking an active approach to the organisation of its property portfolio to meet strategic objectives.

"The new real estate investment company Certeum will be a major player in the Finnish property market, and we are happy to be one of its significant shareholders,” he said.

Sponda, meanwhile, said the sale was in line with its new strategy outlined last autumn, to focus more on property ownership and profitable growth in Helsinki and Tampere office and shopping centres. 

The company said it would sell logistics properties, as well as assets in Russia.

Sponda is also exiting the real estate funds business.

Although the company had committed not to sell shares in Certeum before early 2015, it said it did plan to reduce its ownership of the company in the future.

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