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Three Swedish pension institutions, Alecta, AI Pension and the Swedish Church’s pension fund, have teamed up to create a joint property investment company.
The property company, which will buy and manage retirement homes, will invest about SKr2bn (e208m) within a three-year period.
AI Pension, the Swedish pension fund for architects and engineers, is for the first time teaming up with other pension funds.
“It can often be difficult to co-operate with others as it ties you up and limits your ability to act. But we are too small to get into this segment on our own,” said Maritha Lindberg, chief executive officer of AI Pension.
She expects returns of about 10-12 per cent from the investment, which will increase AI Pension’s real estate allocation from 5 per cent to 8 per cent of assets.
Joint ventures for real estate investments are rare in the Swedish pensions industry, but have proven popular among Danish pension funds. The move also represents the first property investment for the Swedish church’s pension fund, which has decided to begin diversifying its investments away from just equities and bonds.
Pertti Vanhanen, head of direct property Europe at Aberdeen Asset Management, believes there will be more pension funds co-operating in the future, but that joint ventures are yet to become a trend.
“Before you jump into the same bed as another investor, you have to make sure that they are likeminded in strategy and personality. It’s even more challenging if one is the leading investor. But if you have done your homework: made sure that the documentation is in order and thought through what would happen if someone ends up in a difficult solvency situation, then it’s maybe a good thing,” said Mr Vanhanen.
Ms Lindberg admitted that several important considerations had to be made prior to joining forces.
“It’s been a crucial factor that we all had similar interests, the same investment horizon and in the same regulatory framework. That has been a very important ingredient to ensure that everyone feels secure with the constellation,” she said.
Several other Swedish pension funds were involved during the discussion stages, but only three investors opted to move forward.
