SWEDEN - Pension provider AMF has signed an agreement with the fourth Swedish national pension fund AP4 to exchange a 50% stake in residential property company Dombron.
AP4 acquired 100% of Dombron in the summer of 2010 from Vasakronan, another real estate company owned by AP4 and three other national pension funds.
AMF is assuming a 50% ownership in return for transferring SEK400m (€44.5m) in real estate assets to the company.
It has been looking for a way of increasing its exposure to the residential property sector in Sweden without managing the investments internally.
Mats Hederos, managing director of property at AMF, said residential real estate was a very different business to commercial property, and that it was therefore looking to invest through an external platform.
He said the Dombron deal, which will see AMF's weighting to the residential sector increase from close to 2% to approximately 11%, was perfect because AMF would be co-investing alongside a similar investor in AP4.
Hederson said Dombron was also a perfect fit because AMF was explicitly looking to invest in a company that already had a "critical mass" and good management skills and expertise in place.
The arrangement will also allow AMF to delegate residential investments to a third party - while still having an influence on the company - allowing it focus on managing its commercial real estate investments in-house.
Hederos said: "If we did it in a club deal or a fund, we lose that kind of influence. A lot of different issues came together in this transaction, and so it is perfect for us."
Dombron is one of the largest owners and managers of residential properties, with approximately SEK6.4bn. The company has plans to triple its portfolio in size over the next four to five years.
Mats Andersson, president at APF, said: "We are pleased to have AMF as half owner of Dombron. Together, we can develop a real estate company that can benefit from the opportunity we both have as long-term investors."