Vrenen Fastigheter AB is a privately owned property company that invests in residential properties in and around Stockholm. The company was founded in early 2014 and carried out its first acquisition in July the same year. Vrenen Fastigheter (“Vrenen”) is structured as a limited partnership with solely private investors. The property portfolio is managed by Vrenen AB.
The company’s strategy is to invest in low-risk residential assets in cities around Stockholm, typically within commuting distance of the capital.
Vrenen’s strategy is to utilise the fexibility of private capital when buying and selling assets. This typically generates a shorter acquisition period, meaning Vrenen can act fairly quickly as opposed to its competitors. Moreover, the current structure does not make the company "exit-driven" as opposed to traditional institutional investors and funds.
Acquisition sizes are usually in the range of 30-100 MSEK, this price-span tends to be somewhat small for the larger investors (pension-funds, listed companies etc), as well as rather expensive for the private investors. Thus competition in terms of acquisitions within the segment is and has been exceptionally low.
Stockholm is one of the fastest growing regions in Europe. This is predominately due to a rise in immigration; increased birth numbers as well as increased average age. The Stockholm region is growing with 37,000 people per annum and the total population is expected to increase with 20% to 2.5 million people in 2023.
The current and planned supply of residential units will not satisfy the expected demand which the rise in population will generate. This will result in that a larger number of inhabitants will be forced to move to the peripheral areas as well as municipalities around Stockholm. In Sweden 50% of the municipalities (156 of 290) currently have a shortage of affordable housing.
In the Stockholm region this number has increased from 45 in the year 2000 to 100+ in 2015. Thus the majority of towns and municipalities around Stockholm currently have huge residential decits (multi-let as well as single units.) According to recent market-studies Stockholm is expected to be have a residential decit of 100,000 units within three years.
The number of residential assets for sale have during the last couple of years steadily increased. This is mainly due to the fact that a number of governmentally-owned companies have begun to sell of parts of their portfolios in order to free up liquidity for new residential developments.
According to our analysis property transactions in the segment 30-100 MSEK in smaller cities/municipalities (population 25-100 000) are not as frequent as compared to Stockholm, Gothenburg and Malmoe.
Properties within this category tend to be somewhat expensive for the private investor as well as too small for the larger listed companies and funds. Within these cities commercial transactions are most frequent up to 30 MSEK. Based on the market conditions residential properties with low rents in the price range 30-100 MSEK are targeted. Vrenen also works closely with a number of strategic partners and has the ability to acquire larger portfolios (up to 1 BSEK) through certain joint-venture structures.
The low transaction frequency within the segment has also discounted the pricing for residential assets in peripheral cities around Stockholm. This is in turn also reected in the entry-yield, which is around 4-5%+ on average.
Residential investments in Sweden are regarded to be a “non-cyclical” investment due to the fact that the demand for affordable housing is at a record high. The residential demand is in turn seldom affected by potential market volatility. ”Properties that are located along the commuter lines are targeted".