AP3, Sweden’s third national pension fund, has entered a joint venture with Sveafastigheter to invest in regional office and retail real estate.

The new company, majority-owned by AP3, will build a property portfolio, with Sveafastigheter managing assets.

Klas Åkerbäck, senior portfolio manager at AP3, said: “We see great potential in this type of investment since it is a complement to our existing property holdings.

“Together with a company like Sveafastigheter, with its local network, I am certain we can reach an attractive risk-adjusted return.”

Sveafastigheter said 15 commercial properties in Eskilstuna, Skövde, Halmstad, Trollhättan and Östersund and two retail properties in Karlskrona, worth SEK700m (€73.7m), had been bought for the joint venture.

Johan Tengelin, chief executive at Sveafastigheter, said: “The idea is to take a stand in Sveafastigheter’s established business model and create a long-term, sustainable property investment in partnership with AP3.

“The venture fits well with Sveafas­tigheter’s broadened strategy to offer attractive and clearly structured investment opportunities, with another time horizon than the traditional funds.”

Sweden’s AP1 and AP2 and US institution TIAA-CREF last month announced the pooling of their European real estate portfolios to create a €4bn joint venture. 

The Swedish buffer funds are seeding the new entity with six properties managed by Cityhold Property, a wholly owned subsidiary of the two funds, while the US financial services provider will contribute nine properties currently part of its general account.

AP2 could take over unlisted/real assets if planned reforms go ahead, as reported in June.

The merger of AP6 with AP2 would see what is currently AP2 take on responsibility for all of the buffer fund system’s unlisted assets.

Sveafastigheter today said it sold a portfolio out of its 2006-vintage Sveafastigheter Fund II, worth around SEK3.2bn, to Partners Group.

The deal, via a secondary transaction, sees 32 properties in Sweden, Finland and Estonia change hands.

The retail, office, hotel and public use properties will continue to be managed by Sveafastigheter.

The 250,000sqm portfolio includes a mix of development and income-producing assets.

After the sale, Fund II holds assets worth SEK230m.

Fabian Neuenschwander, senior vice-president at Partners Group, said the company foresaw a “continued strong performance” in Nordic real estate markets and Estonia.

“We see a lot of potential in the assets we have acquired,” he said.

In its outlook note for the second half of this year, Partners said it saw more opportunities in the secondaries market.