Northern Horizon Capital, the management company of Baltic Horizon Fund, signed an agreement with Linstow to aquire 100% shares of Tampere Invest SIA, which owns Galerija Centrs Shopping Centre in the heart of Riga.
The purchase price is €75 million, which corresponds to an estimated entry yield of approximately 6,7%. The transaction is expected to close by the beginning of June 2019.
The Galerija Centrs property is located on Audeju Street 16, 1050 in Riga Old Town, next to the National Opera. As a block of Old Town, the 5-floor property complex consists of two buildings connected with a passage of glass roofed arcade.
Originally opened as Army Department Store in 1938, the high street retail centre was last refurbished in 2006 with an added extension. The net leasable area of the property is 20,073 sq m. The anchor tenants include H&M, RIMI, Massimo Dutti, Douglas, Lindex, Esprit, Gant, Marc O’Polo, Max Mara Weekend and others. The fifth floor houses a healthcare centre, a beauty salon and a fitness club.
“We are very pleased to add such a stable landmark cash-flow property to our portfolio. After the acquisition, the fund will strategically own a centrally located retail asset in the heart of every Baltic capital: Galerija Centrs in Riga, Postimaja in Tallinn and Europa Shopping Center in Vilnius. With this position, we strive to become a long-term prime landlord partner for top retailers in the Baltic market who look to develop their current and new brand portfolios. With the acquisition, Baltic Horizon Fund will also become the largest diversified commercial real estate investment fund in the Baltics with close to EUR 350 million assets under management,” commented fund manager Tarmo Karotam.
As part of the transaction, Linstow AS, has agreed to subscribe for Baltic Horizon Fund units for the amount of €4 million. The management company is undertaking to arrange issuance of new fund units, the number of which is equal to the subscription amount divided by the latest net asset value per fund unit preceding to closing by way of private placement. The issuance and listing of new units is expected to take place shortly after closing.
RPA Perspective The combined real estate investment volume in the Baltic states last year totalled €810m according to figures published by Newsec in its Baltic Investment Outlook 2019 report.
Deals in Latvia made up 32% of the total, while Lithuania accounted for a 49% share and Estonia 19%. The most active players were the Baltic region’s biggest commercial real estate fund managers including Northern Horizon Capital and EfTEN Capital, as well as the Swedish companies Eastnine and East Capital, all of which are long-time players in the market. The majority of the deals were for prime office and retail properties and a larger proportion of the investment than in previous years was from global market players.
The largest deal over the year was South-African based NEPI Rockcastle’s purchase of the Ozas shopping centre in Vilnius for €124.6m.
“The acquisition of Ozas marks the entrance of a major international investor to the Baltic market. The Baltic countries definitely have space for players like this, given the development here of exclusive and innovative business and shopping centres with architecture and innovative that surpass the standard of other countries in Europe. Investment decisions are heavily influenced by the number of international tenants of such properties, which is confirmed by the actual transactions. It can be said that the Baltic market has matured to the level that meets the expectations of global market players. These are the investors who are most likely to expand their portfolios in the Baltics,” said Andrius Švolka, the head of transactions at Newsec in the Baltics.
“Three phases can be made out in the development of the Baltic investment market. In the first stage, prior to 2008, more than 45% of the investors came from Nordic countries. In the second phase, up to 2014, capital from the Baltic countries accounted for over 55% of the investment in the region. And in the third, starting in 2015, more than half the market – 55% – has been taken by international investors including from Western Europe, the Nordics, the USA and other regions,” he said.
