The portfolio was purchased from Doughty Hanson & Co., one of Europe's largest real estate fund managers, which has owned the assets since securing an eight-property package in 2004. London-based DHC is now harvesting those investments, previously trading four and now marketing the remaining center in western Helsinki.
"Our acquisition of the Finnish retail portfolio has been a great success and we continue to view Finland as an attractive market," says DHC's Nils Styf, who is responsible for the Nordic region. Styf says he believes ING will continue the same level of upkeep as his firm did, with DHC implementing management and value enhancement campaigns at the properties. The company launched a leasing program at one of the Helsinki assets, for example, and readied the second one, Megahersti, for a redevelopment.
Megahersti is a 68,000-sf property located in one of the city's fastest growing residential neighborhoods, while Kluuvi is an 180,000-sf complex anchored by fashion retailer Halonen in Helsinki's central business district. The largest of the three is Oulu's Stockmann property, a 224,000-sf center anchored by one of Finland's best-known retailers.
At the time representing Finland's largest cross-border real estate sale ever, the 2004 portfolio was acquired for DHC's Fund I, and it has yielded a multiple of 3.3 times on the equity investment and a gross IRR of 55%. The last of the eight now being marketed is Iso Omena, a 610,000-sf shopping center.
Building off the success of the first fund, DHC has launched Fund II. Having just opened offices in Paris and Madrid, DHC officials say they hope to leverage the firm's European presence and property experience to find opportunities similar to those secured in Finland. Besides Nordic countries, the second fund will target Italy, France, Spain, Germany and the United Kingdom.
The managers of Fund II are wasting little time getting their money deployed, having already committed $176 million to properties in a diverse array of ventures. The fund has secured a portfolio of 19 commercial buildings at the Kings Hill Business Park in Kent, England, doing so via a joint venture with Liberty Property Trust. DHC also acquired six office buildings in Stockholm, and has made two residential development plays in Rome and Brescia, Italy. The two funds have completed 28 investments total in eight countries, acquisitions representing 13.9 million square feet and a value exceeding $5.4 billion.
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