Doughty Hanson sells remainder of Ilmarinen portfolio

News

19 March 2007

Doughty Hanson & Co Real Estate is exiting the Finnish market with the sale of the Iso Omena shopping centre, the last and largest asset in the Ilmarinen portfolio it bought almost four years ago.

The fund manager is seeking between €350m and €400m for the asset, which Swedish property consultants Leimdörfer started marketing at the MIPIM property fair in Cannes last week.

In May 2003, DH bought the portfolio of eight mostly retail properties in Finland from Ilmarinen Mutual Pension Insurance for €350m. It was the biggest cross-border deal in Finnish history and paved the way for other international investors attracted by Finland’s economic fundamentals and prospects. But many investors were deterred by the small market’s lack of liquidity.

During 2006 DH sold four of the properties in Finland, and now, as it prepares to return capital to investors in its first Real Estate Fund, for which it originally purchased the portfolio, it is putting the last of the remaining four on the market.

DH sold two assets from its Finnish portfolio in January 2006 for €37m to Citycon, a Finnish property company. The two assets were Myyrmanni, comprising a 26% ownership in a shopping centre in Helsinki, and Valtari, a small shopping arcade in Kouvola. Two further properties have since been sold and three others are on the market.

At 61,300m2, the Iso Omena shopping centre, located in Espoo, west of Helsinki, produced a retail turnover in 2006 of €194.5m, including VAT, and attracted 8.4m visitors. DH is also said to have made a preliminary application for an extension to the building. The centre could fetch up to €350m-€400m, the same figure DH originally paid for the entire portfolio.

In the fourth quarter of 2006, the fund manager refinanced the four remaining properties in the Finnish retail portfolio, returning €35m to investors. At the time, DH said that, with the proceeds from the refinancing, investors would have received cumulative distributions equal to 196% of invested capital.

Timo Nurminen, Catella’s managing director in Finland, said that it is difficult to tell whether DH is coming out of the market at a good time. “There is a huge demand in the market for these types of properties at the moment. In 2006 we saw €3bn of foreign investment in Finland and the market is so liquid at the moment. I would also expect yields to be below 5%,” he said.

Doughty Hanson & Co Real Estate is exiting the Finnish market with the sale of the Iso Omena shopping centre, the last and largest asset in the Ilmarinen portfolio it bought almost four years ago. The fund manager is seeking between €350m and €400m for the asset, which Swedish property consultants Leimdörfer started marketing at the MIPIM property fair in Cannes last week. In May 2003, DH bought the portfolio of eight mostly retail properties in Finland from Ilmarinen Mutual Pension Insurance for €350m. It was the biggest cross-border deal in Finnish history and paved the way for other international investors attracted by Finland’s economic fundamentals and prospects. But many investors were deterred by the small market’s lack of liquidity. During 2006 DH sold four of the properties in Finland, and now, as it prepares to return capital to investors in its first Real Estate Fund, for which it originally purchased the portfolio, it is putting the last of the remaining four on the market. DH sold two assets from its Finnish portfolio in January 2006 for €37m to Citycon, a Finnish property company. The two assets were Myyrmanni, comprising a 26% ownership in a shopping centre in Helsinki, and Valtari, a small shopping arcade in Kouvola. Two further properties have since been sold and three others are on the market. At 61,300m2, the Iso Omena shopping centre, located in Espoo, west of Helsinki, produced a retail turnover in 2006 of €194.5m, including VAT, and attracted 8.4m visitors. DH is also said to have made a preliminary application for an extension to the building. The centre could fetch up to €350m-€400m, the same figure DH originally paid for the entire portfolio. In the fourth quarter of 2006, the fund manager refinanced the four remaining properties in the Finnish retail portfolio, returning €35m to investors. At the time, DH said that, with the proceeds from the refinancing, investors would have received cumulative distributions equal to 196% of invested capital. Timo Nurminen, Catella’s managing director in Finland, said that it is difficult to tell whether DH is coming out of the market at a good time. “There is a huge demand in the market for these types of properties at the moment. In 2006 we saw €3bn of foreign investment in Finland and the market is so liquid at the moment. I would also expect yields to be below 5%,” he said.