AP4 puts the emphasis on finding the right people for its property investments. Mats Andersson speaks to Rachel Fixsen
For Mats Andersson, CEO of Swedish pensions buffer fund AP4, the key to finding the right property investment is finding the right people. “We look for individuals rather than models,” he says. “In general, we don’t invest in funds, because we prefer to do investment directly.”
The investment fund Areim Fund II is an exception in AP4’s real estate portfolio to its preferred direct investment route, mainly because of the highly capable individuals who run it, including founder Leif Andersson, who recently passed on the role of CEO to Therese Rattik to focus on transactions, investor relations and business development.
“Investing directly is the most cost-efficient way to do it, as long as we can find the right people to manage those investments,” Andersson says. Finding the right people means building a network to identify them, he adds.
AP4 has 5.3% of its assets in real estate, which amounts to SEK12.9bn (€1.47bn) in absolute terms. The fund carries out nearly all of its property investments through joint-owned real estate investment companies.
It invests via Rikshem, which is 50% owned by Swedish pensions company AMF, and Vasakronan, which it co-owns with other AP funds and in which it holds a 25% stake, and also owns 15% in the property investment company Hemfosa. Other real estate investments are Areim Fund II and ASE Holdings.
Rikshem invests in residential property within Sweden and currently has a portfolio worth SEK18bn, having started out with SEK5bn back in 2010. “Over the next 12 months, Rikshem will expand even further, but the pace at which it will go has yet to be decided,” Andersson says.
Meanwhile, Vasakronan invests in commercial real estate and now has a SEK85bn portfolio, with investments located in Stockholm, Gothenburg and Malmö. Already the largest real estate company in Sweden, Vasakronan is not expected to expand further.
Hemfosa is an opportunistic real estate investor and has expanded quite rapidly over the past four years. In that period, investments have risen to SEK20bn from SEK15bn, Andersson says. The company is now preparing for a market listing on the Nasdaq OMX, after which AP4 will lower its stake. As one of the pensions buffer funds, it is not permitted to hold more than 10% in a listed company, Andersson explains. All of AP4’s property investments are within Sweden, with the exception of the stake in ASE Holdings in the UK, which the fund sees as promising because of its extremely opportunistic style.
Although Rikshem is still expanding, overall Andersson says AP4 is now more reluctant to add to real estate investments because of the market situation.“I have the gut feeling that everyone is more or less chasing the same assets and whenever this happens, you usually get poor returns,” he says.