AP7 is investing SEK3.57bn (€311m) in central Stockholm mixed-use real estate development Urban Escape, increasing its stake in a joint venture with AMF in a deal which makes the two Swedish pension funds near-equal partners.
Premium-pension default provider AP7 – one of Sweden’s national pension funds – announced today it is exercising the option to boost its stake in Urban Escape which was part of the May 2023 agreement under which it made the original investment in the company.
AP7 said: “In line with the intention from 2023, AP7 is exercising its option to acquire an additional 16.6 percentage points, whereby ownership is increasing from 33.3% to 49.9% of the company Urban Escape.”
It said the purchase corresponded to SEK3.57bn in property value, and that AMF would remain as the majority owner with AMF Real Estate (AMF Fastigheter) continuing as developer and manager of the city quarter.
Lena Fahlén, head of asset management at SEK1.1trn pension fund AP7, said: “Expanding our ownership in Urban Escape is in line with our original intentions and part of our strategic collaboration with AMF.”
She said AP7 looked forward to strengthening the partnership further in the next few years, based on the two pension funds’ “shared values and focus on our savers”.
“We see that real estate is a natural asset class in our long-term management of the default option in the premium pension,” said Fahlén.
AP7’s SEK7.4bn investment in Urban Escape in May 2023, which bought it a 33.3% stake in AMF’s flagship development, was AP7’s first investment in property – an asset class only permitted after the Swedish government expanded its mandate at the beginning of that year.
Now allowed a 20% allocation to alternatives, AP7 has said it intends to invest 8% of its portfolio in real estate over a period of years.
