Ober-Haus chairman Paul Oberschneider and a group of private UK investors have bought an Estonian retail portfolio from US investor Apollo Real Estate Investment Fund III in a landmark €38m deal.
It is the first big international acquisition of a modern retail portfolio in the Baltic states. Oberschneider said: “With rates of 5% on the borrowing side, to get a euro yield of 12.75% is a really great deal.” Chris Eddis, senior partner at UK firm Mornington Capital, which advised Ober-Haus, added: “This is a benchmark deal in the region. Many investors and funds have been circling in the region for some time, but this is the first regional deal of this size.”
The portfolio’s 50,000m2 of retail space, which is mainly in Estonia’s capital, Tallinn, includes the 15,000m2 Norde Centrum and 25,000m2 Lasnamae Centrum, presently under development in Tallinn’s largest suburb. Ober-Haus has been Apollo’s regional operating partner since 1998 and was the developer of the Tallinn retail portfolio.
The deal is expected to be the first of several retail transactions by international property investors in Estonia, Latvia and Lithuania. Funds are being tempted to invest by the region’s political stability and the prospect of EU accession in 2004. Funds targeting the country are thought to include Heitman, Pricoa, DBReal Estate and AIG.
“Estonia is politically stable and there are other macro economic factors that investors should feel comfortable with,” said Oberschneider.
