AMF Fastigheter prepares giant office redevelopment

AMF Fastigheter, the real estate arm of Swedish pension fund AMF, plans to undertake one of the largest redevelopment projects ever in central Stockholm in response to losing one of its key office tenants.

Swedbank is to vacate 45,000 m² at the iconic Gallerian mall by the first quarter of 2014. The bank is to move 2,500 staff to a new, purpose-built headquarters at Sundbyberg Stad near the Swedish capital.

‘We love to have our tenants remain in our properties but this is a very interesting opportunity for us,’ Mats Hederos, CEO of AMF Fastigheter, told PropertyEU. ‘The bank leaves us with a lot of empty space above Gallerian, opening up the possibility for a redevelopment of the entirety of one of the most centrally located blocks in Stockholm.’

Gallerian is a jewel in AMF Fastigheter’s portfolio. One of the first modern shopping centres in Stockholm when it opened in 1976, Gallerian comprises over 30,000 m² of retail area, with a further 100,000 m² of office accommodation in and around the centre. AMF acquired Gallerian in 1999 and has renovated it twice.

Hederos declined to go into detail about the redevelopment envisaged for the office space Swedbank is leaving but said one idea was to expand the property if the opportunity arises. ‘I wouldn’t say we are relaxed but we have a plan - if you are going to lose one of your main tenants it is good to lose them in a location like this.’

The redevelopment - one of the biggest projects for AMF Fastigheter over the coming years - fits into the pension company’s goal of increasing the real estate share in its overall portfolio to up to 15% over time. Property currently accounts for 10-11% of AMF’s investments.

Earlier this year AMF Fastigheter opened MOOD Stockholm, a new shopping centre concept in the Swedish capital that has attracted over 967, 000 visitors during the three first months of trading. MOOD Stockholm comprises only the lower floors with offices above.

‘Retail has a big impact on place-making,’ Hederos said, and consequently AMF Fastigheter concentrates on combining shops and office space.

He noted that MOOD Stockholm was the first new retail scheme in Stockholm for over 20 years and that it is more difficult to acquire much sought-after shopping centres in the city than office properties. ‘Therefore, the office segment will probably be more important in our portfolio when it comes to volume than retail,’ he said.

AMF Fastigheter is part of a small group of well-resourced domestic and international investors which can carry out all-equity transactions in the Swedish market at the moment. Recently, AMF Fastigheter has been in the running - and succeeded - in acquiring office buildings priced between EUR 200 and EUR 200 mln.

AMF Fastigheter is one of Sweden’s largest property investment and development companies, focusing mainly on urban commercial retail and office premises in Stockholm and Gothenburg. The company manages 560,000 m² of commercial real estate with an estimated value of EUR 2.73 bn.