BTA Baltic Insurance Company, a unit of Vienna Insurance Group, has agreed with the Finnish construction company and developer YIT to establish a 30/70 joint venture and co-invest a total of €120 mln in rental apartments in the Baltics.
The two partners have identified a seed portfolio consisting of 500 apartments worth €65 mln which will be acquired by the JV in a forward funding structure. The deal represents the largest residential rental deal in the Baltic so far this year.
Newsec advised YIT on the transaction.
Under the agreement, BTA will acquire five rental apartment projects in Tallinn, Riga and Vilnius from YIT. The assets, which are under construction, will be delivered during 2021-2023.
In the future, the two partners plan to acquire further residential development projects from YIT to reach a value of €120 mln.
Andrius Švolka, the head of transactions at Newsec in the Baltics, commented: 'The deal is structured as a forwarding funding transaction, where the buyer finances the developer at an early stage in the development of properties. It is also a joint venture between the buyer and the seller which in addition to the sale of a seed portfolio includes housing projects that YIT will develop in the future. The market is seeing an increasing interest in residential rental property among institutional investors. The tender that Newsec organized for the sale of YIT’s portfolio also attracted a lot of attention from both international and regional investors.'
This is the second residential rental investment transaction in the Baltics this year. In June, the Belarussian video game developer and publisher Wargaming bought 76 apartments in the Lithuanian capital of Vilnius. That deal had a value of €20 mln.
