(Bloomberg) -- Alecta took a 19% writedown in the value of its biggest investment, a stake in indebted landlord Heimstaden Bostad AB. 

Sweden’s largest pension fund marked down the value of its ownership in the residential company by 8.7 billion kronor ($840 million) in the fourth quarter, according to a statement on Wednesday. In the full year, the value came down by a quarter. 

The pension fund, which oversees 1.2 trillion kronor of retirement savings for a quarter of Sweden’s population, had pushed back the publication of the full-year results to get the most up-to-date valuation on the holding. That investment has already triggered a criminal investigation and a probe by the nation’s financial watchdog.

“We have carried out a market valuation of our shareholding in Heimstaden Bostad AB and arrived at this valuation,” Chief Executive Officer Peder Hasslev said in an emailed response to questions. “Alecta has not valued the properties, i.e. their net asset value, but assessed the market value of Alecta’s shareholding, the so-called fair value.”

Heimstaden Bostad on Tuesday reported a 1.6% drop in property values in the fourth quarter. The landlord also decided to pause payouts to protect its credit rating from further downgrades.

Read More: Landlord Heimstaden Bostad Scraps Dividend to Protect Rating

Europe’s property sector is in turmoil after years of zero rates ended with central banks jacking up rates at a fast pace, causing real estate valuations to fall and squeezing landlords who need to refinance large debt piles. In Sweden, the financial regulator has warned the full effect of rate increases is yet to be seen.

The pension fund a year ago made headlines over risky bets in US niche banks, including the now-defunct Silicon Valley Bank. Those investments cost Alecta $2 billion, prompted the departures of several top executives and also led to an investigation by the Nordic nation’s financial watchdog.

Troubles continued with Alecta’s 38% stake in privately held Heimstaden Bostad, on which it had spent $4.8 billion. It’s Alecta’s largest individual investment. The landlord is currently working to offload properties amid credit-rating downgrades and a steep jump in borrowing costs. 

Overall, the pension fund’s writedowns on those investments totaled 32.7 billion kronor.

Read More: Swedish Watchdog Probes Insurer, Pension Funds Over Landlord

Insurance company Folksam also made a 15% cut in the valuation in the quarter earlier this month.

Alecta last week named Svenska Handelsbanken AB’s former Chief Executive Officer Carina Akerstrom as its new chairman in a bid to remedy past mistakes and restore confidence among its clients. One of her tasks will be to re-negotiate the terms of a disadvantageous shareholder agreement with Heimstaden Bostad’s co-owner, Norwegian billionaire Ivar Tollefsen.

Those talks are ongoing and not affected by the writedown, Hasslev said. 

Read More: Heimstaden’s Billionaire Owner Weighs Stake Sale to Cut Debt

--With assistance from Niclas Rolander, Christopher Jungstedt and Anton Wilen.

(Updates with Alecta comment, value of writedowns from failed investments from fourth paragraph)

©2024 Bloomberg L.P.