DEAL IN DEPTH: Starwood enters Nordics with Swedish retail buy

In a further boost to its European business, US private equity group Starwood has bought a seven-strong retail portfolio in Sweden together with local partner Vencom.

Starwood Capital has made its first acquisition in Sweden since the founding of the company in 1991 with the purchase of a retail portfolio from Kooperativa Forbundet Fastigheter (KF Fastigheter) for SEK 3.9 bn (€435 mln).

Greenwich, Connecticut-based Starwood partnered with Stockholm-based investor and asset manager Vencom on the deal, which involves seven retail schemes in Sweden’s four largest cities of Stockholm, Gothenburg, Malmo and Uppsala. Starwood has a majority stake in the joint venture formed to buy the portfolio while Vencom is taking a minority share and will assume the day-to-day management of the assets.

DEBT FINANCING
Aareal Bank and Helaba are providing €280 mln in debt financing for the acquisition. Aareal Bank will act as facility agent and security agent. 'This portfolio offers significant development potential,' chairman Johan Gustafsson of Vencom told PropertyEU. 'Its acquisition jointly with Starwood is in line with our strategy to develop different investment strategies for our partners and build close and long-term relationships with them to operate in the Swedish market,' he added.

Vencom already partners with investment managers Rockspring and Pramerica in Sweden. In July, the company linked up with Rockspring Property Investment Managers to acquire the Lidingö Centrum mixed-use property in Stockholm in an €89 mln off-market transaction with Vasakronan.

FIRST NORDIC BUY
The acquisition represents Starwood's first foray into the Nordics. 'These seven properties are a tremendous addition to our growing portfolio in Europe, particularly given the attractive fundamentals of these assets,' said Jeff Dishner, senior managing director at Starwood Capital Group. 'The balanced and steady growth of the Swedish economy, the prime location of these assets and the strong tenant profile fit perfectly with our investment focus.'

For KF Fastigheter, the property arm of grocery retail group KF, the disposal is in line with its strategy to refocus on its core business. 'Starwood is a strong and competent investor with the necessary resources to continue to develop our venues. The deal is an important step in our strategy to free up capital for the development of our grocery store business,' said Johnny Capor of KF.

As part of the transaction, KF's Coop supermarket chain is extending its lease on four of the seven sites, nearly doubling the weighted average unexpired lease term. The properties are currently 96% leased and each location is anchored by a Coop, Sweden’s second-largest supermarket chain. In addition to Coop, the tenant roster comprises retailers such as XXL, MediaMarkt, H&M and Systembolaget.

The 205,000 m2 portfolio - which includes Arninge in Täby, Bäckebol in Göteborg, Boländerna in Uppsala, Bromma in Stockholm, Jägersro in Malmö, Tunapark in Eskilstuna, and Weibullsholm in Landskrona - also provides building rights for an additional 70,000 m2 of space spread over three of the locations.
CBRE, Advokatfirman Lindahl, Nordier, PwC and WSP acted as advisors in the transaction. KF and the subsidiary KF Fastigheter were advised by Tenzing and the business law firm Mannheimer Swartling.

COMPANY PROFILE
Vencom Property Partners is an independent Stockholm-based investor and asset manager focusing on the Nordic real estate market. It was founded by chairman Johan Gustafsson in 1994 as a financial advisory firm. Vencom’s core business is strategic asset management and development in partnership with international real estate investors, with a special focus on retail assets. The company currently owns around €800 mln of properties and development projects in the Nordics.

By Virna Asara
Rome Correspondent