EUROPE - Finnish pensions insurer Veritas has sold a 113-asset portfolio to German fund manager Patrizia in the first residential deal involving an investor based outside the region.
Although the parties agreed not to disclose figures, the acquisition will make up a third of a new €400m pan-European residential fund - that is, around €130m.
A spokeswoman for Veritas said: "We just had too much residential and too much real estate.
"Because we're a pension insurance company, we're required to diversify and not put too much in one asset class.
"Most pensions investors have smaller real estate portfolios than we do."
The sale has reduced the insurer's real estate allocation from just over 21% to 18% of a €1.6bn portfolio.
Patrizia adds the acquisition to a portfolio already worth €3bn.
It acquired the asset for a specialist fund, Euro City Residential Fund I, targeting cities with "growth prospects", including Helsinki.
Patrizia spokesman Andreas Menke said: "All the cities have in common that demand will increase and supply is limited.
"In the Helsinki Metropolitan area, we see a big potential for increasing rents due to ongoing urbanisation trends."
Euro City is one of four funds, collectively worth €1.1bn, focused exclusively on residential real estate. The fund targets a yield of 5-5.5% annually over a 10-year period.
Interest to date has come from pension funds and insurance companies across Europe looking for diversification outside their home markets, Menke said.
"With these investments, our investors safeguard their portfolio because residential real estate is a stable value in unstable times and provides a sustainable and calculable income," he added.
The fund manager is currently scouting more acquisitions for the Euro City and other funds, specifically in Helsinki's Metropolitan area.
According to a municipal planning department document drawn up for the area in 2008, the population of Metropolitan will grow by 10% by 2030 to 1.6m.
The city's current 10-year plan, to 2017, estimates the annual addition of 5,000 residential units.
Free-market rental properties account for only 40% of the current stock.
In a separate development, Finnish property investor Sponda announced it has sold a two-hectare plot in Helsinki Metropolitan to developer Skanska Talonrakennus for €6.5m.
The land, which netted Sponda a €2.9m capital gain, has planning permission for housing production worth €3m.
Sponda said the land did not fit with a strategy focused on office, retail and logistics.
The company, which has €2.8bn in assets, counts among its five largest shareholders Finnish insurers Ilmarinen (4.34%) and Varma (0.70%), as well as the Finnish state pension fund VER (0.61%).
