Alecta to exit international direct real estate

Alecta, Sweden’s largest occupational pension provider, is exiting all of its directly held international real estate.

The SEK732.5bn (€78.7bn) institution will close its offices in the UK and US as it sells a portfolio of 48 real estate assets in the two countries.

Its US subsidiary Alecta Real Estate Investment and its UK office will either be transferred to a future buyer or closed.

Alecta also has some indirect investments, mainly in the UK, which it said are not included in the sale. Alecta is understood to have close to €4.5bn in real estate assets in total.

Per Frennberg, CIO of Alecta, said high demand for real estate investments was an opportunity to restructure the way in which the organisation invests in the asset class.

“Our foreign operations have been extremely successful in consistently generating above average returns, but they have always been a bit of an organisational anomaly in our streamlined business which prioritises economies of scale within our investment strategy.

“The current strong demand for global real estate offers a good opportunity for us to take yet another step in our development towards our vision, to be the most efficient occupational pension fund in the world.”

The move has been made despite property giving the fund the highest return of its three main asset classes last year, as reported last month.

Alecta’s Swedish indirect property investments returned 27% last year, compared with a 17% return achieved on direct holdings.

Frennberg recently said Alecta was cautiously optimistic on the outlook for real estate in its key markets, despite recent strong performance, because it believed fundamentals were still solid.

Alecta has appointed property agency JLL to market the portfolio, which includes office, retail, multifamily and industrial assets.

JLL international director Peter Nicoletti said: “A portfolio of this scale, which features exceptional tenancy and world-class diversity, offers investors an opportunity to deploy a significant amount of capital in safe haven markets across two of the world’s most stable economies.”

In the US, the portfolio includes office, grocery-anchored and high street retail, as well as multifamily and industrial properties. Most of the portfolio is in California, the southwest and northeast.

In the UK, the portfolio includes industrial, office, big box and high street retail located in and around London.

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