The Zhitong Finance App learned that at a time when Swedish real estate is in crisis, the Nordic fund Nrep is preparing to use more funds from its $1.9 billion cash balance to bid for properties from landlords.

As Swedish real estate companies compete to divest properties that can no longer be financed using expensive bond debt, Nrep, part of the Urban Partners Investment Group, is seeking to profit from heavily indebted real estate companies such as Samhallsbyggnadsbolaget i Norden AB (SBB) and Heimstaden Bostad AB.

Urban Partners' CEO Claus Mathisen said in an interview, “Sweden's financing methods and market structure make this country very compelling.”

Mathisen's fund's three biggest deals this year accounted for 15% of commercial real estate transactions in Sweden. He expects that by 2025, the fund will have more deals with real estate companies that are still struggling to refinance $25 billion of maturing bonds.

“There has never been so much interest and dialogue from the outside world,” he said.

The trading market has slowed drastically due to the difficulty for buyers and sellers to agree on prices, and Nrep is planning to take advantage of this opportunity. So far in 2023, there have been only SEK 64 billion (US$5.8 billion) in real estate transactions, a decrease of nearly 60% compared to the same period last year.

Mathisen said, “If you have the faith, courage, and ability, then investing when others can't is a good time to act.”

So far this year, in Sweden, Nrep has acquired two office buildings in Stockholm from Fabege AB, 51% of shares from Klovern AB, a series of nursing homes from Vectura Fastighter AB, and a number of other deals. Although these assets have been tracked for a long time, Mathisen said the current market conditions make these transactions “very suitable now.”

The group's ambitions didn't end there. In May of this year, Urban Partners raised 3.65 billion euros for a fund mainly targeting real estate in the Nordic region, bringing the total assets under management to 20 billion euros. Mathisen said the fund's investment capacity is at “the highest level ever” in terms of capital and personnel.

Nrep's interest in the region reflects a broader trend where sufficient institutional investors such as Brookfield Asset Management (BAM.US) are replacing listed real estate companies as asset buyers. According to data from Colliers Research, capital inflows to Sweden have increased this year, with foreign buyers accounting for 30% of acquisitions, but only 11% of divestments.

These capital inflows occurred against the backdrop of unexpectedly flexible commercial real estate prices in Sweden. Despite rising interest rates in the country, housing prices are currently one of the worst falling countries in the world. However, analysts at the rating agency Nordic Credit Rating expect the downward pressure to intensify as price expectations become more consistent. Mathisen shared the same view, saying sellers and buyers are now negotiating lower prices.

“It's completely a buyer's market,” Mathisen said. “The market may falter, but we're not selling in 12 months.”