SWEDEN - The Fourth Swedish National Pension Fund (AP4) has made one of the largest ever residential investments in the country.
AP4 has acquired SEK5.6bn (€565m) worth of appartments from Vasakronan, the real estate company jointly owned by AP4 and three other national buffer funds.
AP4 is expected to complete the purchase of the Dombron residential property unit on 1 July 2010, following a decision by Vasakronan to divest its residential exposure to concentrate on commercial property investments.
It will be the one of the largest residential transactions ever made in Sweden.
Mats Andersson, chief executive at AP4, said it was a good investment that would match the fund's return requirements.
"The residential part of the real estate market is a pretty good place to be - there is lower volatility," he said.
Vasakronan, which has been owned by the four Swedish buffer funds (AP1-4) since its merger with AP Fastigheter in 2008, made the decision to start divesting its residential exposure with the agreement of its four joint owners.
It will now focus on retail and office properties in Stockholm, Uppsala, Gothenburg, Malmo and Lund.
"Since the residential part of Vasakronan was less than 10%, it always had a minor role in the company," Andersson said.
"The company and the owners strongly believe the more focus you get, the better."
The large portfolio, comprising 8,000 apartments in Stockholm, Uppsala and Gothenburg, with a total area of 480,000 square metres, was placed on the market earlier this year and attracted a number of interested parties.
AP4 was the successful bidder.
When asked whether AP4 was looking for more real estate investments in Sweden, Andersson said the fund would concentrate on "digesting this large chunk of real estate" for the time being.
He declined to say how much capital the buffer fund had available to allocate to new real estate investments, but he confirmed there was enough to "keep us busy for at least a couple of years".
AP4 invests purely in non-listed real estate in Sweden.