A fund wholly owned by Icelandic pension funds has finalized the acquisition of Heimstaden in Iceland, which operates approximately 1,600 long-term rental apartments in the country. The seller is the Norwegian investment company Fredensborg AS, the parent company of Heimstaden Bostad AB, one of Europe’s largest residential real estate companies.
The fund’s intended purchase, which is managed by Stefnir, was initially announced last October; however, the agreement was subject to certain conditions, including financing, which have now been resolved. The transaction is currently under review by the Icelandic Competition Authority.
With this milestone, the termination of lease agreements for approximately 250 households has been rescinded. Heimstaden had previously announced plans to sell its assets on the open market and exit the rental business in Iceland. Furthermore, over 60 apartments will be removed from the sales process and advertised as available for rent in the coming weeks. This is expected to have a positive impact on the housing supply in the rental market, as the apartments in question are all located within the capital area.
The long-term goal of Heimstaden’s new owners is to create a service-driven rental company that will act as a new force for development in the residential market, thereby supporting government objectives for increased access to housing. The company intends to finance the development of new rental apartments with the aim of doubling the size of the company in the coming years.
Recently, there has been significant uncertainty among staff and tenants regarding the company’s future, but with this acquisition, that future has been secured and asset sales have been discontinued. Egill Lúðvíksson will continue as CEO, and no changes will be made regarding Heimstaden’s staff, whose extensive experience and knowledge of the rental market are considered highly valuable to the company.
The Ministry of Finance's plans for a proposed legislative amendment regarding pension fund investments in the residential market played a decisive role in reaching this milestone.
The advisors to Fredensborg AS in the transaction are Arctica Finance and LEX Law Firm, while the buyers’ advisors are BBA, Logos, Frumherji, Deloitte, and KPMG Law.
