FINLAND - VR Pension, the €920m Finnish state railway workers pension scheme, has agreed a joint venture with Stockholm-based hotel firm Scandic to build a hotel in the centre of Tampere, Finland's second largest city.
Under the terms of the deal, VR will fund the construction of the hotel as the sole owner. Scandic will then manage the asset.
Construction of the eight-storey, 207-room hotel will begin in August 2010. Completion is expected in 2012.
Neither the pension scheme nor the hotel firm would disclose further details of the joint-venture agreement. But asked his view on hotels as a subsector, VR finance director Hannu Hokka said: "It is a prudent way for a pension fund to invest and matches with long term liability."
He added: "We have made good investments in prime location hotels before with well-timed exits." VR sold Helsinki's Holiday Inn in for €90m in November 2007.
In contrast to those in other Scandinavian markets, such as Sweden, the pension fund has not been pushed into the secondary city by a lack of available assets in the capital. Hokka said there was no shortage of acquisition opportunities in the capital of Finland but added that Tampere was "a good business city", adding: "A hotel in a prime location will work."
This will be Scandic's third hotel in the city.
VR has built up a 10% allocation to property since re-entering the asset class in October 2009, following a two-year absence. The scheme invests both directly and via real estate funds.