EUROPE - Cityhold, the property firm set up last year by Sweden's first and second national buffer funds, has acquired its second prime London office asset for €174m from UK property firm Delancey.

The firm acquired the Midtown property, which is held on a 25-year lease from the Crown Estate, in anticipation of what it sees as likely rental growth in the location between the West End and the City of London. The rent on the asset acquired this week is £45 (€56.8) per square foot, compared with an average £90 in the West End.

Commenting on the acquisition, chief executive Per Sjöberg said: "It may be 10 years before we see growth in that area but we're investors for the long term."

Cityhold has an investment horizon of up to 40 years and a €1.1bn asset acquisition target. AP1 and AP2 have each contributed €500m to the enterprise.

Sjöberg told IP Real Estate sourcing a second office asset that met the pension fund owners' criteria for asset quality, location and pricing had taken "a vast amount of work".

He added: "But we're selective and we don't need to allocate - our owners have put no time limit on deployment."

However, the fact that Cityhold is an equity buyer gives it an advantage over some of its competitors, Sjöberg added.

"We aren't always the highest bidder but we are reliable. It's an important focus for us to build that reputation in the market," he said.

Moreover, the firm is willing to accept shorter leases on assets but is less comfortable with compromising on location and asset quality. "The longer the lease, the more competition there is for the asset," said Sjöberg. "For us it's only one major criterion."

Despite scouting Paris as a second large, liquid and transparent market, Cityhold has yet to acquire a single French asset.

"There's quite a limited number of suitable properties in Paris and competition for them is even stronger than it is in London," he said. "We're nowhere near an acquisition but we are actively looking."

Cityhold also recently began searching for potential acquisitions in Hamburg.