GLOBAL – Finnish private equity firm CapMan has raised €50m from domestic and US investors in the first closing of a value-added real estate fund targeting Nordic markets.
The Finnish investors had all invested in one or more of Capman’s three previous real estate funds.
The fund, which targets Nordic office and retail assets for periods of between three and five years, now has a warchest of €125m, when accounting for the €8m in manager co-investment and up to 60% debt financing.
Mika Matikainen, head of real estate at CapMan, said investors were beginning to look outside core markets to value-added opportunities they were unable to access directly.
“Core has undoubtedly been attractive to investors but supply is limited,” he said. “It is quite natural to look at other opportunities, especially in the Nordics, where there is a big spread between core and secondary.
“Especially where investors don’t have the organisation to do direct investments, a fund is a natural route. Investors in core assets with long leases can outsource the management, but when you work with the assets we’re targeting, you need expertise."
The timing of the first closing coincides with investor willingness to take on more risk within their real estate portfolios. Matikainen said active investors were in any case likely to combine core and value-added strategies.
“Combine that with the underlying economies, and these are interesting opportunities to go into,” he said.
Macroeconomic factors have at least partly driven investor appetite for Nordic real estate markets. “Europe is suffering," said Matikainen. "Compared with Central and Eastern Europe, and especially southern Europe, the Nordic economies stand out. But demand is also for the real estate markets themselves. They’re transparent and liquid. It’s easy to transact in them.”
The manager will now target international investors and Finnish pension funds that “for whatever reason” could not participate in the first closing. CapMan is aiming for a final closing in 2014.
Pension providers Ilmarinen, Eläkekassa Verso and Varma are among the firm’s largest shareholders.
