Doughty Hanson refinances Finnish retail portfolio (FI)

Doughty Hanson & Co Real Estate has refinanced the four remaining properties in its Finnish retail portfolio. The refinancing will return €35 million (US$44.5 million) to investors.

Together with the proceeds from the four assets already sold from the portfolio, this equates to an overall return to date of €51.1 million (US$63.3 million), representing a 1.4 times return on the cash investment and a gross IRR of 17%.

Doughty Hanson's first Real Estate Fund acquired the portfolio of eight Finnish retail assets in May 2004 from Ilmarinen Mutual Pension Insurance Company, as part of the restructuring of the latter's real estate portfolio. It was the largest ever cross-border real estate transaction in Finland.

Nils Styf, responsible for the Nordic activities of Doughty Hanson & Co Real Estate, said:
"Since our acquisition of the Finnish retail portfolio in 2004, we have initiated a successful value enhancement programme through active management and sold four non-core assets from the original portfolio. We have taken advantage of the effect of this active management, and an improving retail investment market in Finland, to complete today's refinancing."

The remaining assets in the portfolio are as follows:

 Iso Omena Kauppakeskus – a 53,700 sq m shopping centre in western Helsinki;
 Kluuvi Kauppakeskus - an 18,000 sq m shopping centre (including office buildings) in the central business district of Helsinki;
 Megahertsi Kauppakeskus – a 6,700 sq m retail centre in eastern Helsinki; and
 Pekuri City Block – a 22,600 sq m shopping centre, including the Stockmann department store in the northern town of Oulu.

Doughty Hanson's first European Real Estate Fund, which began investing in 2000 and was one of the first pan-European real estate funds to be established, is one of the most successful real estate funds of its type. With the proceeds from this refinancing, investors in that Fund will have received cumulative distributions equal to 196% of invested capital.

Doughty Hanson & Co European Real Estate Fund II closed in July 2006 with €560 million of equity, providing the capacity to acquire or develop real estate with a value in excess of €2 billion.

Senior debt for the refinancing was provided by Hypo Real Estate Bank International AG.

Source: Doughty Hanson

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