Sponda's Helsinki-focused, homogenous portfolio made it an attractive target for a Blackstone takeover bid, Erik Høvik, a director and partner at Nordic advisory firm Pangea Property Partners has told PropertyEU.
'Today, Sponda is probably one of the top 10 listed companies in the Nordic region. It’s slightly smaller than its Finnish peer Citycon, and a similar size to Norway’s Entra and Olav Thon. Then there are several larger Swedish companies, but it’s still one of the big players in the Nordics,' Høvik said.
'We've been seeing for some time that there's more and more interest in Finland from international investors. The yields there are fairly good compared to its Nordic neighbours,' he added. 'Sponda's Helsinki-focused, homogenous portfolio therefore makes it an attractive choice for significantly growing Blackstone's presence in Finland,' he explained.
Sponda currently has a focus of around 60% office assets, plus some 30% of retail, with a few non-core properties in its portfolio.
History beyond Helsinki
Sponda, which celebrated its 25th birthday last year, was established in 1991 by Bank of Finland to take over the Finnish and foreign real estate properties held by the Skopbank Group together with its sizeable equity portfolio. Incidentally, 1991 was also the year that Blackstone launched its real estate business.
Sponda passed into the hands of Finland's Ministry of Finance in 1996, and was floated on the Helsinki Stock Exchange in June 1998.
The firm appointed current CEO Kari Inkinen in June 2005 with a mandate for growth. Under Inkinen, Sponda expanded into Russia and the Baltic States, as well as buying out Kapiteeli Oyj from the State of Finland, becoming one of the largest property investment companies in the Nordic countries.
In the wake of the global financial crisis, Sponda decided to withdraw from the Baltic countries in 2009 and reshuffled its business operations.
Exiting Russia and logistics
Continuing with its Russian strategy, it bought and sold properties in Moscow and St Petersburg at the start of the current decade, while selling off several logistics properties.
By 2015, it had cemented plans to exit Russia altogether and divest its remaining logistics holdings, including its 38% stake in the Finland-based logistics business Certeum.
It was Blackstone which stepped in to buy Sponda’s stake in Certeum, plus shares from Varma Mutual in October 2015, paying what was believed to be about €290 mln for around 58% of Certeum. Certeum was absorbed into Logicor, which Blackstone sold last week to China Investment Corporation (CIC) for €12.2 bn.
At the time of Blackstone's takeover bid, Sponda had declared its intentions to fully exit Russia by the end of 2017 and finally divest the remainder of its logistics holdings.
Blackstone's options
Sponda's non-core assets are only 5-6% of the portfolio and Blackstone is likely to remain on track with the strategy to sell them, said Høvik.
‘For the remaining portfolio only time will prove if Blackstone, post take-over, will adjust the portfolio, split it or grow the platform. Such a large portfolio and well-positioned company gives Blackstone lots of options going forward,’ Høvik added.
Sponda’s share price has been trading at a discount to its portfolio value, adding pressure on the company to be broken up or sold. ‘It’s likely there are some value-add plays that Blackstone can contribute. They have a track record of buying at the right time,’ concluded Høvik.
In the last two years, Blackstone has made a significant push into the Nordics, with deals including the acquisition of 10 funds from Obligo in 2015, paying around €2.4 bn for a diverse package of assets in Norway, Sweden, Finland, Latvia, Germany and the US. Significant portions of this portfolio were subsequently sold.
Last year, Blackstone acquired a major stake in D. Carnegie & Co., the largest listed real estate company in Sweden specialising in residential property.
