Swedish pension funds form JV with Catella

The First and Second Swedish National Pension Funds (AP1 and AP2) are setting up a joint venture with financial services and brokerage firm Catella to invest in European real estate, Catella announced on Tuesday.

The pension funds will be joint and equal (50/50) owners of the new company, which will have total equity capital of EUR 500 mln. The joint venture will enable both funds to establish long-term ownership of real estate in the most significant European markets. The company plans to focus on investment in offices that are 'centrally located in major European cities,' Catella said.

Rickard Backlund, former CEO of Aberdeen Property Investors, will chair the new company. The work of appointing the other members of the board and the recruitment of a CEO has already started.

Under an agreement with the pension funds, Catella will provide support in terms of resources, competence and expertise during the build-up phase of the new company.

Johan Magnusson, CEO of Första AP-fonden (First National Swedish Pension Fund/AP1), commented: 'These investments in real estate can provide us with a solid return relative to the level of risk. As long-term investors, this presents us with a promising opportunity to complement our other real estate investments in Sweden and elsewhere with a number of well chosen properties in Europe. This offers a rapid and cost-efficient means of building up a real estate company that through its investments can utilize knowledge of the local markets.'

Johan Ericsson, CEO of Catella, noted: 'The initiative adopted by the First and Second Swedish National Pension Funds represents a new form of direct investment in foreign real estate. It unites the capacity and financial competence of these institutions with Catella’s market know-how and market proximity, with a view to creating long-term value. We are proud of the confidence expressed by the First and Second Swedish National Pension Funds in entrusting Catella with this mission.'