FINLAND - VR Pension Fund has re-entered the real estate market after a two-year absence, following the decision by a Finnish construction company to sell assets to local pension funds.
YIT Group has sold two properties to VR Pension Fund and Varma Mutual Pension Insurance, respectively.
This represents VR's first real estate acquisition since selling all of its property exposure two years ago, as it bought the properties for €17m.
Hannu Hokka, managing director at VR Pension Fund, said the acquisition - along with another unnamed property deal in Espoo - was the pension fund's "first step" back into the market, following the sale of the Holiday Inn in the centre of Helsinki in November 2007, for €90m.
At the time, the hotel combined with another property in Tampere (which was also sold in 2007 for €19.7m) to represent some 10% of VR's total assets under management.
The decision was made to sell the asset to reduce risk, but it is only recently that Hokka has seen the market environment improve enough to re-enter the real estate sector.
"We are seeing good markets. We are seeing demand and supply meeting. It is a buyer's market and the yields are at a level where we don't have to use leverage," he said.
The new acquisitions place VR's allocation at between 3% and 4%, although the long-term strategic weighting is closer to 15%.
"So there will be more to come," Hokka said.
The property sold by YIT is situated in Järvenpää, adjacent to the railway station, and let to the Helsinki Cooperative Society Elanto's grocery shop S-market.
Hokka said most prospective sellers of properties in Finland were construction companies like YIT.
Varma has meanwhile purchased a logistics centre in the Gulf of Kujalassa from YIT for €12m, which is planned to be completed in July 2010 and will be home to transport company Transpoint.
