Strategic partnership to invest in European office properties

Press release

First and Second Swedish National Pension Fund, together with TIAA-CREF, create strategic partnership to invest in European office properties

The First (AP1) and Second Swedish National Pension Fund (AP2) together with TIAA-CREF, a leading financial services provider, have agreed to combine forces in a new joint venture to create a leading, pan-European office investment platform committed to building €4bn+ office portfolio. TH Real Estate, have established the platform for the joint venture and will manage the vehicle on the investors’ behalf, providing investment and asset management services.

The joint venture will be seeded with existing properties owned by the TIAA General Account and AP1 and AP2’s properties in Cityhold Property AB, creating an initial platform valued at €2.2bn comprised of 258,000 sq m of core office space across the UK, France & Germany. With 15 assets (9 contributed from the TIAA General Account and 6 from AP1 & AP2), the current portfolio includes landmark assets such as 12-14 New Fetter Lane and One Kingdom Street in London, Tour Areva in Paris, and Atlantic Haus in Hamburg.

The venture will commence an active investment programme with new capital from the TIAA General Account, AP1 and AP2 targeting an additional c. €2bn of investment over the next 3 years. It will primarily target ‘core’ investments in Tier 1 cities such as London, Paris, Munich, Hamburg, Frankfurt and Berlin. Additionally, the investment programme will invest  in ‘value-add’ opportunities such as leasing, renovation and development opportunities in Tier 1 cites, or stabilised core investments within Tier 2 cities that include Madrid and Milan , among other cities.

The newly formed investment vehicle, to be named ‘Cityhold Office Partnership’, will target a loan-to-value ratio of 50%. TIAA-CREF will hold a 50% interest in the vehicle and each AP fund will hold 25%. The joint venture extends the long-term investing partnership between TIAA-CREF and AP2, which has been co-investing with TIAA-CREF since 2012 in various real asset strategies including TIAA-CREF’s timberland strategy and investing in farmland in the United States, Australia and Brazil.

The transaction is expected to close in September.

Johan Magnusson, CEO of AP1, said: “We are excited to merge the existing Cityhold properties with those owned by TIAA-CREF, while also making a commitment to make further investments in the coming years. The greater capital base provides the vehicle with better opportunities to make good long-term investments in commercial properties in a number of selected large European cities.”

Eva Halvarsson, CEO AP2 said: “In 2011, in partnership with AP1, we established Cityhold Property AB with a view to investing in real estate in the major European cities. Now that Cityhold’s property portfolio is being merged with TIAA-CREF’s European portfolio of commercial real estate, we have successfully enhanced and  diversified the portfolio of European real estate, in line with the strategy originally outlined for the company. Moreover, with TH Real Estate, we gain an operating partner of considerable expertise, especially with regard to local markets.”

Phil McAndrews, Senior Managing Director and Chief Investment Officer of TIAA-CREF Global Real Estate said:“Our investing partnership with AP1 and AP2, like-minded investors who share our long-term investing horizon and focus on high quality assets, enables us to further diversify TIAA’s existing European office portfolio across asset, tenant and market exposures while establishing a broader platform to expand our European investments.”

Johan Åström, Head of Investment, Sweden, TH Real Estate, said: “We are delighted to have been entrusted to establish this European platform for TIAA-CREF’s and the First and Second AP Fund’s co-ownership of commercial real estate. The platform brings together market-leading investment competence and local property expertise in a joint view on value creation. We look forward to managing, supporting and developing the platform in the years to come.”

Jasper Gilbey, Director at TH Real Estate and lead adviser of the investment vehicle, said: “Our strategy will be to target core office opportunities across Europe with a focus on low risk, liquid markets such as London, Paris, Hamburg, Munich, Berlin and Frankfurt. While the venture will focus on core opportunities, it will also consider value-add opportunities within these core Tier 1 markets, as well as stabilised opportunities in other key European cities, as a means of boosting performance and generating attractive risk adjusted returns. In addition to liquidity and diversity, the target markets have been selected on the basis of their long run structural trends, such as demographics, technology and sustainability, which we expect to drive strong growth prospects and result in enhanced investment performance in the long-term”

For further details contact:
AP1
Ossian Ekdahl, Head of Communications, +46 8-566 20 209, or +46 709-681 209
Oskar Backman, Portfolio manager, +46 709-68 12 53

AP2
Ulrika Danielson, Head of Communications, +46 31-704 29 29, or +46 709-50 16 13

Helena Olin, Head of Real Assets, +46 31-704 29 00
TH Real Estate
Helena Winje, Press Contact, +46 8-58 80 95 00, or +46 70-204 94 85

About TIAA-CREF:
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with $869 billion in total assets under management (as of 6/30/2015) and is the leading provider of retirement services in the academic, research, medical and cultural fields

About TIAA-CREF Asset Management:
TIAA-CREF Asset Management (https://www.tiaa-cref.org/public/assetmanagement) is a global investment manager, registered investment advisor and wholly-owned subsidiary of TIAA-CREF that provides investment advice and portfolio management services to individual investors, intermediaries and institutional clients, including the TIAA General Account. Its strategies cover a wide array of asset classes, including equities, fixed income, real estate and alternative investments.

About AP1:
Första AP-fonden (AP1) is one of five AP funds in the Swedish national income pension system. The capital reserves in the AP funds ensure that pension benefits can be paid even when disbursements from the pension system exceed contributions into it. Första AP-fonden has assets under management of approximately SEK 300 billion in a global portfolio comprising equities, fixed income securities, real estate, private equity funds and hedge funds. Första AP-fonden invests to achieve high and long-term sustainable return. More information about Första AP-fonden at www.ap1.se

About AP2:
The Second AP Fund (AP2) is one of northern Europe’s largest pension funds, managing assets totaling more than SEK 300 billion of Sweden’s national pension assets, which are invested worldwide. The Fund is tasked with generating a solid return on investment, while implementing a consistent policy of responsible and sustainable investment. www.ap2.se

About TH Real Estate:
TH Real Estate is an established investment management company, specialising in real estate equity and debt investment worldwide. As one of the largest real estate managers in the world, TH Real Estate has the scale, capital resources and knowledge to provide creative and effective real estate investment solutions for clients. With a focus on the retail, office, logistics, debt and multifamily residential sectors, TH Real Estate emphasises sustainable practices to protect assets and maximise their value.

The company is owned by TIAA-CREF, a US financial services and Fortune 100 company, with €791bn assets under management . Launched in April 2014, TH Real Estate has a dedicated global presence with offices across America, Asia and Europe, representing c.€25.6bn1 of real estate assets across c.50 funds and mandates. Together with TIAA-CREF’s US real estate assets, the global real estate platform of €78bn1 represents one of the largest real estate investment management enterprises in the world.

Its products are managed by specialist teams, which apply their own experience to the management and style of their portfolios. Each team is supported by an experienced senior management team and integrated investment platform, including finance, debt and currency management, performance analytics, client service, fund and transaction structuring, development, sustainability and research.
www.threalestate.com

2019

Första AP-fonden provides additional information regarding the departure of Chief Executive Officer Johan Magnusson

On 2 September, Första AP-fonden (AP1) announced that the board had decided to dismiss Johan Magnusson from his role as Chief Executive Officer due to his violation of the internal regulations of the fund. The fund has now concluded its assessment of the need for confidentiality in accordance with the Swedish Public Access to Information and Secrecy Act in relation to the information, and has decided to publish further details.

Johan Magnusson to leave AP1. Teresa Isele appointed Acting CEO.

The Board of Directors of Första AP-fonden (AP1), Sweden’s First National Pension Fund, has decided to dismiss Johan Magnusson from his post as CEO with immediate effect.

Första AP-fonden’s return for the first half of 2019 was 9.7 per cent after expenses

Första AP-fonden’s (AP1’s) positive net investment income of SEK 31.4 billion for the first six months of 2019 entails an increase in total net assets to SEK 352 billion as per 30 June. AP1 thereby exceeds the long-term target of a real return after expenses of 4.0 per cent over a rolling ten-year period. During the first six months of 2019, SEK 3.0 billion was transferred to the income pension system.

Första AP-fonden has decided to accept the public offer of Oriflame

Första AP-fonden har beslutat att acceptera det publika budet på Oriflame om 227 kronor per aktie.

The Council on Ethics of the Swedish AP Funds Annual Report 2018: New issues in focus during 2018

For more than 10 years, the AP Funds’ Council on Ethics has exercised influence on the AP Funds’ global portfolio of listed companies to improve their environmental, human rights and corporate governance work through engagement and dialogue. During 2018, the engagement and efforts of the Council on Ethics have been directed at problem areas such as Facebook and human rights; the use of pesticides threatening the survival of bees; and the legalisation of cannabis in Canada and the emergence of listed cannabis companies. Other focus areas have been oil companies’ long-term climate work, deforestation in South America, and tailings dams in Brazil.

Swedish AP Funds form new company – Polhem Infra – for investments in infrastructure

AP1, AP3 and AP4 (Swedish National Pension Funds) form a joint company, Polhem Infra, for investments in unlisted Swedish companies focusing on infrastructure.

Första AP-fonden Ownership Report 2018: focus on developing sustainability work and preparing for changes to the AP Funds Act

Första AP-fonden (AP1) publishes its Ownership Report (English version) for 2018 today. Developments in the field of sustainability continued at a fast pace during the year. Intensive preparations were made ahead of the changes to the AP Funds Act, in partnership with the other AP Funds.

Decision regarding the procurement of Investment Management services for Global Emerging Markets Equities

In the procurement for External Management of Global Emerging Markets Equities (reg.no EXT2018:25) Första AP-fonden has decided to approve several managers.

Första AP-fonden Annual Report 2018: Exceeding the long-term goal

Första AP-fonden’s (AP1’s) net investment income for 2018 as a whole amounted to SEK -2,074 million (29,349) after expenses. This equals a return of -0.7 per cent (9.6). Total net assets amounted to SEK 324 billion at the year-end. The average annual real return after expenses for the past ten-year period is 7.4 per cent, which is higher than the target of 4.0 per cent.

Changes to the AP Funds Act

On 1 January 2019, the rules in the National Pension Insurance Funds (AP Funds) Act changed. For example, a new goal has been introduced that the First, Second, Third and Fourth AP Funds must contribute to sustainable development by managing their funds in an exemplary way.

2018

Swedish National Pension Fund Första AP-fonden (AP1) to Measure Sustainability Through Arabesque S-Ray®

Arabesque S-Ray® and AP1 are working closely together to develop a sustainability score assessing the compliance of companies with Human Rights.

Young employees give new perspectives

New recruits at Första AP-fonden (AP1) are plunged straight into the core business and have an opportunity to influence the results.

Financial institutions launch cutting-edge research project to integrate climate change into strategic investment decisions

The financial institutions AP1, a.s.r., OPTrust, Pensioenfonds van de Metalektro (PME) and Philips Pensioenfonds, supported by Ortec Finance - the provider of investment decision technology and solutions - announce the launch of their climate-savvy Asset Liability Management/Strategic Asset Allocation (ALM/SAA) pilot project.

Green financing for Willhem AB

Första AP-fonden’s (AP1’s) wholly owned housing company Willhem is planning to issue a ‘green bond’ to fund its environmental initiatives.

Första AP-fonden’s return for the first half of 2018

Första AP-fonden’s (AP1’s) net investment income for the first half of 2018 amounted to SEK 8.5 billion (16.1) after expenses.

Important for a board member to dare to say no

The nomination committee helps ensure that the Board of Directors is comprised of the right areas of expertise.

AP1 invests in new Emerging Markets Equity Impact fund of BlackRock

BlackRock has launched the BlackRock Emerging Markets Equity Impact Fund, responding to Swedish pension fund AP1’s wishes to invest with sustainability considerations in the emerging markets.

Sustainable investments on emerging markets

Första AP-fonden (AP1) is investing in a new, data-driven fund with a sustainability emphasis, with investment management company BlackRock. The focus is on emerging markets.

The Council on Ethics focuses on counteracting corruption

The Council on Ethics of the Swedish National Pension Funds (the Council) celebrated ten years in 2017. During these ten years, the Council has influenced global portfolio companies to improve their work and information regarding environmental, social issues and corporate governance through corporate dialogues.

Första AP-fonden’s return for 2017 was 9.6 per cent after expenses

Första AP-fonden’s (AP1’s) net investment income for 2017 as a whole amounted to SEK 29.3 (27.0) billion after expenses.

2017

Climate Action+

Första AP-fonden (AP1) has signed the Climate Action 100+, a collaborative five-year global initiative.

Hermes Investment Management wins $400 million Global High Yield mandate

Hermes Investment Management, the £30.1 billion manager (30.6 2017), has been appointed to manage a $400 million Global High Yield credit investment mandate by Första AP-Fonden (AP1), one of five buffer funds in the Swedish national income pension scheme.

Första AP-fonden’s return for the first half of 2017 was 5.2 per cent after expenses

Första AP-fonden’s (AP1’s) net investment income for the first half of 2017 amounted to SEK 16.1 billion (10.6) after expenses. This equals a return of 5.2 per cent (3.5).

The Ethical Council Annual Report 2016 – Human rights continues to be in focus

The Ethical Council of the Swedish AP Funds celebrates ten years 2017. During these ten years the Council has through engagement encouraged the AP Funds' global portfolio companies to improve their work on environmental issues, human rights and corruption.

Elo, Första AP-fonden and Trevian establish a joint venture to invest in Finnish real estate

Elo Mutual Pension Insurance, Första AP-fonden (AP1) and Trevian Asset Management Oy have agreed to establish a joint venture company which invests in the Finnish real estate market.

Första AP-fonden’s return for 2016 was 9.3 per cent after expenses

Första AP-fonden’s net investment income for 2016 as a whole amounted to SEK 27.0 billion (11.3) after expenses.

2016

Första AP-fonden accepts GE’s bid for Arcam

Första AP-fonden (AP1) has decided to accept General Electric’s (GE) bid for Arcam. The bid expires tomorrow Friday 14 October.

Första AP-fonden’s interim report January – June 2016

Första AP-fonden’s net investment income after expenses for January – June 2016 amounted to SEK 10.6 billion. Return after expenses was thus 3.5 per cent.

Första AP-fonden’s 2015 annual report

Första AP-fonden’s net investment income after expenses for 2015 amounted to SEK 11.3 billion. The return was 4,0 percent after expenses, which is in line with the Fund’s target.

2015

AP Funds to co-ordinate carbon footprint reporting

The Swedish AP Funds, the First, Second, Third, Fourth, Sixth and Seventh AP Funds, have agreed to coordinate the way carbon footprints are reported.

Första AP-fonden’s six-month report

New initiatives and targets met by a margin

Strategic partnership to invest in European office properties

First and Second Swedish National Pension Fund, together with TIAA-CREF, create strategic partnership to invest in European office properties

AP1 part of consortium acquiring Fortum Distribution AB

Första AP-fonden har som del av ett konsortium bestående av Borealis Infrastructure, Tredje AP-fonden (AP3), Folksam med dotterbolag och Första AP-fonden (AP1) (”Konsortiet”) idag ingått avtal om att förvärva Fortum Distribution AB, Fortums elöverföringsverksamhet i Sverige.

Första AP-fonden’s annual report: High return benefits the pension system

Första AP-fonden’s net investment income after expenses for the 2014 full year amounted to SEK 36.4 billion. Return after expenses was 14.6 per cent.

2014

Första AP-fonden hires Kaj Martensen

Första AP-fonden (AP1) has hired Kaj Martensen from January 1, 2015.

Första AP-fonden’s semi-annual report

Good return makes valuable contribution to the pension system

Första AP-fonden’s annual report: Continued strong return

Första AP-fondens resultat 2013 uppgick till 25 678 mkr efter kostnader.