Excellent track record supporting
CapMan Real Estate
CapMan Real Estate invests in commercial and hotel properties and property development projects in Finland and the other Nordic countries. Value creation in our investments is based on active asset management and co-operation with our tenants.
As of the end of 2011, our four real estate funds held a total of 58 properties in their portfolios. We made one new investment and a number of add-on investments in our existing properties during the year, totalling €56.6 million. In addition, we exited three properties, recording good returns for our fund investors. As of the end of the year, CapMan Real Estate had made a total of 30 exits, generating an average 2.0 return on invested capital*. Exit negotiations are under way on several properties in our portfolio and we expect to complete a number of these during 2012.
Despite uncertainty in the European economy, the Nordic region continued to be an interesting market for international real estate investors. Although the overall volume of real estate transactions remained at a modest level in 2011, the demand for retail properties in particular continued to grow steadily. Good performance in the retail sector had a positive effect on the leasing market, and the overall occupancy rates of the properties in our funds remained higher-than-average.
Re-organising our operations and targeting Nordic expansion
Some major developments took place in the Real Estate team during 2011. In June, as part of CapMan Group’s overall strategy and simplification efforts, we sold our real estate consulting business, to its management. The new owners continued to drive the business under the name Realprojekti Oy. The decision enabled our team to focus more on our core business, which is real estate fund management. On-going cooperation with Realprojekti will ensure that we continue to have access to high-quality property development services in the future.
In addition to streamlining our business, we took the first major step in expanding our operations outside Finland by signing a partnership agreement with NEP Partners, a real estate investment and asset management company with extensive and long-standing experience across the Nordic region. Our goal is to begin fundraising for a new Nordic real estate fund during 2012 and to further strengthen the real estate team, particularly in Sweden.
Active property development as a basis for value creation
We initiated several development projects in our properties during 2011. The most important projects were carried out in the Turun Centrum commercial centre in Turku, the Willa shopping centre in Hyvinkää, and the GLO Hotel Linna in Helsinki.
A complete refurbishment of Turun Centrum was finalised in November. Retail and office space there was modernised, together with the exterior of the building and car parking facilities. Another large shopping centre project took place in Hyvinkää, where we carried out the development of Phase 2 of the Willa shopping centre, which is expected to be completed during 2012. A major project to more than double the capacity at the GLO Hotel Linna was launched during the year, The new extension with more than 120 new rooms was opened in February 2012.
The growth of the Nordic real estate market will provide a number of new opportunities for our team. We are very well-placed to expand our activities across the entire region and to continue our successful investment activities going forward.
*) Of 30 exits, 27 are from CapMan RE I fund in Finland and 3 from assets managed by NEP in Sweden.