Sveafastigheter seals three-digit retail buy in Finland

Nordic private equity firm Sveafastigheter's Fund III has bought a portfolio of 68 retail properties leased to food retailer Kesko from peer company Niam. Although financial details were not disclosed, the deal is understood to be worth between EUR 100 and 150 mln.

Aareal Bank, the existing lender to the properties, provided debt to finance the acquisition.

The assets - all grocery stores and supermarkets located throughout Finland - offer a leasable area of 80,000 m² and are entirely occupied by Kesko. Niam initially bought the properties in a sale-and-leaseback transaction with Kesko at the peak of the market in 2006. The investor enjoyed strong cash-flow over the past five years, and sold the portfolio at a time of approaching lease expiries and growing capex requirements. The remaining lease term on the assets is four years.

Sveafastigheter plans to invest in the portfolio alongside private group Capitol AM, which has been retained to asset manage the properties. The two business partners plan to spend 'tens of millions' to revamp the assets, Patrick Gylling, a partner and CIO of Sveafastigheter, told PropertyEU.

'The transaction fits perfectly with our strategy to find assets in which tenants have investment needs not being fulfilled by the financing structure in place,' Gylling said, adding that Kesko is 'an active occupier willing and able to co-invest in the assets'. 'We will reposition the portfolio as core, lift its market value and create value for our investors and for the tenant.'

Sveafastigheter is not new to the Finnish retail sector. In June last year the company acquired a portfolio of 10 retail properties for around EUR 50 mln while in March it closed an EUR 42 mln sale-and-leaseback with Delta Motor Group on a 53,000-m² retail package.