Major Helsinki region shopping centres into British hands

Ilmarinen sells Iso Omena and Myyrmanni in Finland's largest ever cross-over real estate deal

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The Ilmarinen Mutual Pension Insurance Company has agreed to sell some of its commercial real estate to British venture capitalists Doughty Hanson, whose main interest areas are private equity, real estate, and technology ventures. Doughty Hanson are purchasing four large Helsinki region shopping centres - Iso Omena, Kluuvi, Myyrmanni, and Megahertsi - along with five other Finnish properties, in a real estate deal worth a total of EUR 350 million. According to Ilmarinen, this is the largest ever cross-over real estate transaction in the country.
      The agreed transaction represents 15 percent of Ilmarinen's total real estate holdings. According to Timo Kankuri, head of real estate investments at Ilmarinen, the deal is as profitable as it is strategically significant. "It serves Ilmarinen's intention to shift the real estate emphasis from direct ownership towards indirect."
      Indirect ownership refers to being in possession of shares of companies owning the actual properties. This way Ilmarinen escapes having to manage the properties. The possible selling of ownership will also be considerably easier.
      In practice, the increase of indirect ownership means investments abroad. After Thursday's transaction with Doughty Hanson, Ilmarinen still owns properties worth a couple of billion euros. At present, the share of Ilmarinen's foreign investments is a trifling EUR 50 million.
     
The most valuable property that changed hands on Thursday was the 18-month-old shopping mall Iso Omena in Espoo. It represented half of the value of the total transaction.
      In the northern technology city of Oulu, the British buyers acquired the so-called Pekuri property development, which houses the city’s Stockmann department store. Other properties included in the deal are located in Imatra, Savonlinna, and Kouvola.
      The total floor area of the sold commercial properties is 135,000 square metres.
      Ilmarinen bought Iso Omena and Pekuri at the turn of the millennium from Nordea Bank. At the time, both properties were under construction, and Ilmarinen never considered a long-term ownership. Owning special real estate such as shopping centres or hotels does not line up with the mutual pension insurance company's policy.
     
According to Timo Kankuri, Doughty Hanson are at the moment extremely interested in acquiring shopping malls and other commercial property. The selling of Iso Omena was aided by over a dozen other bids.
      Of the three foreign finalists, Doughty Hanson was finally chosen, based on the British company's willingness to purchase most of Ilmarinen's shopping centre portfolio all at once.
      The closed deal is significant to Doughty Hanson, whose previous real estate portfolio was worth a little over a billion euros. Doughty Hanson's European Real Estate Fund, which was established five years ago, owns three shopping centres in Stockholm. In addition, the company builds housing in Copenhagen and Italy.
      The Real Estate Fund's primary clients are pension and insurance firms, who wish to invest in property.


Links:
  Ilmarinen
  Doughty Hanson and Co.

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