SWEDEN - A joint venture between the €21bn third Swedish pension fund (AP3) and Stockholm-based developer Kungsleden has acquired a public property portfolio for SEK1.1bn (€120.2m).
Initial yield on the deal with state property agency Vasallen is 7.5%, with a rental value on the assets of SEK125m.
AP3 entered the joint venture, Hemsö, last spring as a means of gaining access to public infrastructure.
Under the terms of that venture, Kungsleden transferred 50% of its public properties - at that time, mainly retirement homes and schools - to AP3 for SEK14.6bn.
A new chief executive, Per Berggren, will take over the venture - which has close to 250 properties and assets of SEK15bn - later this year.
The portfolio acquired this week comprises municipal assets with tenants that include the municipalities of Gotland and Karlskrona, a branch of the Swedish Social Insurance Administration and the Östersund police authority.
Vasallen completed refurbishment of the assets between 2003 and 2010.
Kungsleden chief executive Thomas Erséus said: "These are high-quality assets that have been totally refurbished in the past few years, and the price level offered us a high, stable return.
"We're not in a fast-growing market. We're in a low volatility market."
Setting aside the main tenants of the 40 buildings that make up 60% of the rental, the average lease length is nine years.
"It's difficult to tell whether there was much competition for these assets," Erséus said.
"The size limits potential buyers, so perhaps they were not 20 - perhaps more like five or 10."
