Starwood teams up with Vencom to buy massive Swedish retail portfolio

US private equity group Starwood has joined forces with local investor and asset manager Vencom to acquire a 205,000 m2 retail package in Sweden from KF Fastigheter.

The two partners paid SEK 3.9 bn (€435 mln) for the assets, which include seven retail schemes in a number of Swedish cities. Starwood has a majority stake in the joint venture formed to buy the portfolio while Vencom is taking a minority share and will take over the day-to-day management of the assets.

Aareal Bank and Helaba are providing €280 mln in debt financing for the acquisition.

'This portfolio offers significant development potential,' chairman Johan Gustafsson of Vencom told PropertyEU. 'Its acquisition jointly with Starwood is in line with our strategy to develop different investment strategies for our partners and build close and long-term relationships with them to operate in the Swedish market,' he added.

Vencom already partners with investment managers Rockspring and Pramerica in Sweden.

The acquisition represents Starwood's first foray into the Nordics. 'These seven properties are a tremendous addition to our growing portfolio in Europe, particularly given the attractive fundamentals of these assets,' said Jeff Dishner, senior managing director at Starwood Capital Group. 'The balanced and steady growth of the Swedish economy, the prime location of these assets and the strong tenant profile fit perfectly with our investment focus.'

For KF Fastigheter, the property arm of grocery retail group KF, the disposal is in line with its strategy to refocus on its core business. 'Starwood is a strong and competent investor with the necessary resources to continue to develop our venues. The deal is an important step in our strategy to free up capital for the development of our grocery store business,' said Johnny Capor of KF.

As part of the transaction, KF's Coop supermarket chain is extending its lease on four of the seven sites, nearly doubling the weighted average unexpired lease term. The properties are currently 96% leased and each location is anchored by a Coop, Sweden’s second-largest supermarket chain. In addition to Coop, the tenant roster comprises retailers such as XXL, MediaMarkt, H&M and Systembolaget.

The portfolio - which includes Arninge in Täby, Bäckebol in Göteborg, Boländerna in Uppsala, Bromma in Stockholm, Jägersro in Malmö, Tunapark in Eskilstuna, and Weibullsholm in Landskrona - also provides building rights for an additional 70,000 m2 of space spread over three of the locations.

CBRE, Advokatfirman Lindahl, Nordier, PwC and WSP acted as advisors in the transaction.