Data points to profit-taking on Swedish property

Jonathan Boyd
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Data points to profit-taking on Swedish property

Analyst outlooks together with publicly available information on Swedish property companies and their investors suggest that significant net sales could take place as they cash in on high valuations of assets, particularly associated with the Stockholm market.

According to property adviser Pangea Property Partners’ latest outlook there is a plethora of private property investors set to sell out because of the high prices currently being seen for prime property in Sweden. Likely buyers are pension funds and venture capital firms, Pangea has suggested. The outlook has been reported in business publication Affärsvärlden. According to the data, expectations are for some 300,000 square metres of office space to be converted into residential and other forms of property through 2017-18, which is estimated at more than the expected addition of new floorspace of some 200,000 square metres over the period.

However, certain institutional investors may also be looking to sell out of Swedish property. It has been reported that BlackRock has sold equity in Castellum, a Swedish listed property developer and manager with operations across the Nordic region. It reported 9% growth in income from property management for its 2016 year, with a proposed dividend of SEK5 per share.

Following the sale of equity, BlackRock owns some 11.3 million shares or about 4.2% of the company, via a number of funds, reports property specialist publication Fastighetsnytt. One of those funds is listed below among other key shareholders in Castellum, according to FE data. Over the past 12 months to 2 February the share price has gone from about SEK92 to about SEK122 – an appreciation of some 32% over the period, according to data from Castellum’s own website.  Total return from the property company over the period was over 14%, but over the past decade it has provided investors with total return of some 842%.

The next MSCI IPD Sweden Annual Property index covering 2016 is due for publication by 20 February. The 2015 index showed a 14.1% headline return across all property sectors, although office property returned more at 16.2% according to the methodology. Annual returns averaged 8.3% over the 10 years to the end of 2015, the index data suggested.

According to the MSCI IPD Nordic Quarterly Property Fund index to the end of September 2016, the region’s property funds returned 8% on an annualised basis, or 1.7% in the third quarter of 2016 alone on a euro basis. On a local currency basis, returns were -0.4%. Property equities returned 24.6% over the quarter on a euro basis.

Fund Holding % CASTELLUM AB 3yr % return (€)
SEB – Stiftelse Sverige – Jan 99 (Q186)
6.42 36.2
SEB – Swedish Value – Nov 06 (Q177)
6.41 31.46
Parvest – Real Estate Securities Europe – Jan 14 (FGZA)
6.1 30.49
Odin – Eiendom – Aug 00 (O063)
4.41 47.22
Lannebo – Smabolag – Aug 00 (ADA7)
3.56 67.92
SEB – Sverige Expanderad – Oct 87 (Q182)
2.91 31.48
SEB – Sverige – Dec 84 (Q181)
2.87 31.56
Lannebo – Mix – Aug 00 (ADA9)
2.66 28.65
State Street – Europe Small Cap Equity – Jun 98 (AHP6)
2.58 31.37
GinsGlobal – Real Estate Index – May 02 (ANU6)
2.51 36.92
BlackRock – SF European Diversified Equity Absolute Return – Aug 10 (KLH5)
1.54 -5

Source: FE