Castellum to Sell Swedish Portfolio for $85M

Fanborgen 3. Image courtesy of Intea Fastigheter AB

Castellum AB has just entered into an agreement to sell three commercial properties in Halmstad, Sweden, for SEK 714 million, or roughly $84.6 million. Gothenburg, Sweden-based Castellum will sell Fanborgen 3 and two parts of Fanan 39, which account for a total of approximately 391,500 square feet of leasable space, to Stockholm’s Intea Fastigheter AB.

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The most prominent property in the portfolio is Fanborgen 3, a 24-story high-rise that holds the distinction of being the second-tallest building in Halmstad. Fanborgen 3, also known as Trade Center, is an iconic office property that opened in 1991 and counts as its anchor tenant the University of Halmstad, which occupies two-thirds of the building. Castellum came into possession of the property in 2014, with the acquisition of a nine-asset portfolio in the area. The remaining properties to be sold to Intea consist of two parts of the nearby Fanan 39. Overall, the portfolio is 94 percent occupied and has a rental value of SEK 55 million, or approximately $6.5 million.

Fanborgen 3 and the two parts of Fanan 39 all sit within close proximity of the University of Halmstad. And it is the issue of location that prompted Castellum’s decision to sell the assets. The company is convinced that continued development benefits from having one and the same owner of the entire area, Henrik Saxborn, CEO of Castellum AB, said in a prepared statement. With the completion of the transaction, Intea, whose presence in Halmstad dates back to 2016, will become the sole owner of all properties that the University leases in the submarket.

Slow-going sales in Sweden

Sweden’s commercial real estate market has suffered much the same as that of the rest of the world amid the spread of COVID-19, with multifamily and logistics faring well and office and retail offering a mixed-bag of results. In the third quarter of 2020, year-over-year commercial property sales in Sweden decreased 67 percent, according to research from CBRE. The office sector saw an 83 percent year-over-year decline in sales. “The third quarter is not a great quarter for the [office] investment market in normal times, and in Corona times it is even more sluggish,” according to a CBRE report. The trading of assets like Castellum’s Fanborgen 3, however, is characteristic of the current dynamics. “Properties that hold public tenants, are tax financed or in other ways are less cyclical, seem to be preferred by the investment market,” as noted in the report.