(Bloomberg) -- Turmoil in Nordic real estate markets has started attracting interest from investors looking to take advantage of landlords shedding assets to weather a looming liquidity crunch. 

Urban Partners raised a record €3.65 billion ($3.9 billion) for a fund targeting rental apartments, warehouses, care homes and offices, according to a statement from the private equity firm, which specializes in property in the region. The so-called value-add fund — a strategy focused on older properties in need of investment — is the largest of its kind focusing solely on Europe, the company said on Thursday.

Sweden is at the epicenter of Europe’s unfolding real estate market crisis. Landlords that amassed vast portfolios at low interest rates are grappling with a sudden leap in financing costs. Falling values are compounding the strain and putting pressure on property owners to sell assets to reduce debt levels. The tension is creating opportunities for cash-rich investors to snap up bargains. 

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“We are encountering more motivated sellers with portfolios that are facing refinancing,” Urban Partners Chief Executive Officer Claus Mathisen said in an interview. “These opportunities are much more prevalent across the Nordic markets.” 

Despite the market correction, demographic trends such as aging, urbanization and sustainability are intact and support an investment case, he said. The latest real estate fund will focus mainly on Denmark, Finland, Sweden and Norway. 

Up to 20% will be allocated to other markets, including Poland and Germany, as tighter energy-efficiency standards creates the need for vast capital improvement projects, according to Mathisen. 

“Germany was extremely hit by the reduction of Russian gas and is really keen to transition” to greener buildings, he said. “We see a huge amount of capital is needed, and the banks are not providing it.” 

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Urban Partners, which now manages about €20 billion of assets, was created as an umbrella for real estate investor NREP, venture capital firm 2150, credit platform Velo Capital and private equity investor Luma Equity. 

The new fund, called NSF V, is about double the size of its predecessor, which raised about €1.8 billion. The heightened interest bucks the trend with investors otherwise hesitant to commit fresh money to real estate funds. 

Most of the investors are existing clients of NREP, though the larger fund size had allowed some bigger investors with minimum investment thresholds to invest for the first time, Mathisen said.

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