19 March 2023
Savills Investment Management has entered into an agreement to acquire six fully let residential assets in Sweden for c. €100 million for its European Living platform. The seller of the assets was the Swedish listed developer and property company K2A Knaust & Andersson Fastigheter AB, and the deal was sourced off market.
The portfolio of acquisitions is located in the university cities Uppsala, Västerås and Gävle in Sweden, and is built with a strong ESG profile. This includes attributes such as solar panels, predominantly timber framed buildings, carpools, bike locker rooms, sedum roofs, social common areas, affordable rents and garbage recycling systems among other sustainable characteristics. All assets will have an environmental certification; “Miljöbyggnad Silver” or “Svanen”, and efficient heating systems including thermal and district heating, being free of fossil fuels.
The buildings in Västerås and Gävle were built between 2019 – 2021 and comprise 359 apartments with a total lettable area of 14,443 sqm. The buildings in Uppsala are currently being finalised and will at completion comprise 216 apartments with a total lettable area of 11,366 sqm.
Five out of the six properties are built under the investment subsidy system with energy bonuses implying affordable rental levels with low tenant turnover rates. Closings are planned for May 31st 2023 for the assets in Västerås and Gävle and December 1st 2023 for the assets in Uppsala.
Savills IM was advised on the transaction by Roschier and the seller K2A will be retained as property manager for the portfolio.
Patrick Au Yeung, Senior Fund Manager, European Living, Savills Investment Management, commented:
“We believe the time is now for the European residential sector. The fundamentals are robust, and the supply/demand imbalances are acute and likely to remain persistent. This portfolio is another clear indicator that Savills IM’s European Living platform continues to go from strength to strength. The platform benefits from a strong and experienced fund management team, the extensive investment and asset management network of Savills IM across the region and the backing of Savills plc - one of Europe’s leading real estate advisory businesses."
Marc Gonzalvez, Responsible for Pan-Euro residential acquisitions at Savills IM, says:
“This portfolio of assets clearly illustrates our ability to secure high quality residential portfolios at prices significantly below the levels seen over the last 12-18 months. Sweden is one of the strongest residential markets in Europe with close-to-zero vacancy risk. We look forward to acquiring more portfolios of similar quality across Europe and will continue to focus on assets with a strong ESG story via existing credentials or achieved following active asset management. We believe the coming quarters will provide an historically attractive entry point for investors looking for exposure to the growing European residential sector.”
Lisen Heijbel, Head of Investment Nordics at Savills IM, says:
“This portfolio of assets highlights our preference for modern residential buildings in growing university cities and particularly in attractive central locations. With most assets being built using investment subsidies, rents are much more affordable than the majority of the competing new stock in these cities. The strong affordability of this portfolio creates a solid long-term leasing profile and an attractive risk-adjusted return profile for our investors. With rising construction costs across Europe, we feel that a price per sqm of €3,750 reflects an attractive entry point in the Swedish market, and consider this a future proof level set against replacement costs.”
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"This portfolio is another clear indicator that Savills IM’s European Living platform continues to go from strength to strength."
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