Sweden’s AP7 this morning announced an SEK5.6bn (€520m) acquisition of nine public buildings located around Sweden from Castellum, as a first step in a planned SEK25bn push into the property segment under the umbrella of a newly-established subsidiary.
The SEK1.5trn pension fund said it was setting up Secura Fastigheter as a new Nordic real estate company through the acquisition of the portfolio of “social infrastructure properties focused on public institutions operating at the core of society’s rule of law”.
Maria Björklund, head of alternative investments at the Stockholm-based institution, said: “The portfolio provides a strong foundation for the establishment of our new real estate company, Secura. “The assets are of high quality, demonstrate a clear sustainability profile and generate stable cash flows.
“As a responsible and committed owner, we see good potential to build a leading company focused on quality, security and long-term value creation, AP7,” she said.
AP7 said the portfolio includes about 110,000sqm of lettable area, with properties located in the Gothenburg region, Örebro, Malmö and Jönköping, which are fully let to public sector tenants.
Tenants include the Swedish National Courts Administration, the Swedish Police Authority and the Swedish Prison and Probation Service, it said.
At Nordic commercial real estate firm Castellum, chief executive officer Pål Ahlsén said his firm had built and managed the nine properties in a way that created value.
“Now we’re taking the next step and prioritising capital use in line with our goal of a 10% return on equity,” he said, adding: “We’re pleased to be able to hand over these well-managed properties to AP7, which is a natural and long-term owner going forward.”
AP7 said it was aiming to gradually build a diversified and sustainable real estate portfolio at Secura, focusing initially on properties for the justice system and complementary segments within social infrastructure.
“The ambition is to reach a portfolio value of approximately SEK25bn within five years,” it said.
AP7’s mandate was changed in 2023, increasing its scope for investments in illiquid assets, such as real estate, private equity and infrastructure, and in the last year it has been particularly busy hiring staff to manage the planned new and larger allocations to these asset classes.
The mandate allows for up to 20% of the rapidly-growing premium pension default fund’s assets to be invested in alternatives, but AP7 has said it does not expect to reach that level.
So far, AP7’s main real estate investment is in the central Stockholm mixed-use development Urban Estate, which it first made in 2023 alongside Swedish occupational pension fund AMF, and at the end of 2024 increased its stake with an SEK3.57bn investment following its original SEK7.4bn spend.
“In addition to investments within social infrastructure, AP7 intends over time to broaden its real estate investments to include other priority segments, such as residential and office properties,” the pension fund said.
Advisers to AP7 in the transaction with Castellum, which is expected to close in this year’s second or third quarters, are REIN Capital Partners, Setterwalls and Bloc Tax, the pension fund said.
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