The limited partners of CapMan Real Estate I Ky are Veritas Pension Insurance Company, Veritas Life Insurance Company, Etera Mutual Pension Insurance Company, Suomi Mutual Life Assurance Company, Varma Mutual Pension Insurance Company, Kaleva Mutual Insurance Company, Local Insurance Mutual Company, Sampo Life Insurance Company Ltd and The State Pension Fund.
The fund has acquired 17 properties in the Helsinki area for MEUR 220
The total size of the fund is EUR 500 million and its investment focus is on commercial premises in the Helsinki metropolitan area. In a transaction that was concluded today, CapMan Real Estate I Ky has purchased 17 commercial properties in the Helsinki area with a gross asset value of about EUR 220 million from institutional investors. The remaining capital in the fund is intended to be placed over a five-year period in new real estate investments in the Helsinki area and development of the portfolio. The best-known asset in the portfolio is the Bronda property located on Eteläesplanadi in Helsinki’s city centre. The majority of assets comprise modern office buildings with vacancy rates around 5%.
The fund has solid independent resources
CapMan Plc has established a subsidiary named CapMan Real Estate Oy to act as the fund’s management company. CapMan Plc has an 80% share in the subsidiary and real estate consulting company Corintium Oy owned by Jukka Iivari, M.Sc. (Econ.), has a 20% share. In addition, CapMan Plc and Corintium Oy have acquired specialists in real estate development business Realprojekti Oy and Realprojekti Kiinteistökehitys Oy in a transaction that was finalised today. Following the acquisitions CapMan Plc has an 80% stake in both companies and Corintium Oy has a 20% stake. The companies’ net sales in 2004 were EUR 1.7 million and the operating result was EUR 0.2 million. They employ 15 persons, who will all continue as old employees. CapMan Plc will finance the acquisitions with cash and a share issue to the owner of Realprojekti Oy, Markku Hietala Holding Oy. CapMan Plc will issue 181,818 new B shares. Following the share issue, the total number of CapMan Plc B shares will rise to 67,048,048 and the Company’s share capital including A shares to EUR 750,480.48. The rise in share capital will be notified immediately for entry in the Trade Register.
Realprojekti Oy acts as advisor to CapMan Real Estate Oy funds. Realprojekti Kiinteistökehitys Oy continues its present consulting business after the transaction. Deputy Judge Markku Hietala, LL.M., acts as the Managing Director of both Realprojekti Oy and CapMan Real Estate Oy. He will also become a member of the Management Group of CapMan Plc.
The EUR 500 million total capital in CapMan Real Estate I Ky includes EUR 100 million in shareholders’ equity. The fund’s structure offers investors the opportunity to invest in the fund by subscribing to a EUR 100 million bond issued by Real Estate Leverator Oyj and intended to be listed on the Helsinki Stock Exchange. Real Estate Leverator Oyj is a Finnish limited company that was founded for the arrangement and will finance CapMan Real Estate I Ky. A similar fund structure was previously used for the CapMan Mezzanine IV fund. In addition, the fund has a EUR 300 million senior bank loan facility. Sampo Bank Plc has acted as underwriter of the bond and law firm Borenius & Kemppinen has acted as CapMan’s legal counsel in the establishment of the fund.
CapMan has two main business areas in future
Following the establishment of CapMan Real Estate I Ky, CapMan will provide management and advisory services in two main business areas: funds making direct investments in portfolio companies (CapMan Private Equity) and private equity real estate funds making real estate investments (CapMan Real Estate). Investments by CapMan funds investing directly in portfolio companies focus mainly on the Nordic countries in three investment areas, which are middle market buyouts (CapMan Buyout), investments in IT and communications sectors (CapMan Technology) and life science investments in medtech companies (CapMan Life Science). Management fees and carried interest income received from private equity real estate funds are typically lower than those from funds making direct investments in portfolio companies.
”The establishment of a private equity real estate fund is a significant step in CapMan’s development,” states Heikki Westerlund, CEO of CapMan Plc. ”Through acquisitions we now have solid independent resources at our disposal for the long-term development of the new business area.”
”The long-standing low interest rate level and subsequent increase of investors seeking returns on real estate investments creates positive expectations for appreciation in property values. A substantial proportion of Finnish real estate deals in the past two years have been won among others by international private equity real estate funds, because of their favourable capital structure. CapMan’s new private equity real estate fund, which uses the same type of capital structure, now introduces a competitive opportunity for Finnish investors to participate,” says Jukka Iivari, Chairman of the Board of CapMan Real Estate Oy.
“The fund has a good initial situation because it has a diversified portfolio of 17 properties at market-based valuation, and a vacancy rate of only 5%. The fund will make further investments to a value of EUR 300 million in commercial real estate in the Helsinki metropolitan area during the next 4-5 years. This represents on average the acquisition of some 5-7 properties per year,” continues Iivari.
Private equity real estate funds are a growing trend in Europe
One of the most important trends in the development of international real estate investment markets is indirect real estate investments through private equity real estate funds. Indirect real estate investments have grown strongly in the United Kingdom, Netherlands and Germany in particular, and it is estimated that there are some 400 non-listed European real estate funds at the moment. Real estate fund activities are at an early stage in the Nordic countries, and CapMan is one of the first private equity investors to introduce the concept to Nordic markets.
Press conference:
A press conference on the establishment of the CapMan Real Estate I fund will be held for the media and analysts today, 20 June 2005 at 2.00 p.m. in CapMan Plc’s premises at the address Korkeavuorenkatu 32, Helsinki. Presentation material from the press conference will be available at the same time on CapMan’s Internet pages at www.capman.com.
For further information, please contact:
Mr Heikki Westerlund, CEO, CapMan Plc, tel. +358 9 6155 8304
Mr Jukka Iivari, Chairman of the Board, CapMan Real Estate Oy, tel. + 358 400 405 956
Mr Markku Hietala, Managing Director, CapMan Real Estate Oy and Realprojekti Oy, tel. +358 500 405 879
CAPMAN PLC
Jerome Bouix
Director, Fundraising and IR
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