Teesland iOG, the operating company of Teesland plc, the pan-European fund and asset manager, announces its intention to launch the Nordic Aktiv Property Fund, a 750 million fund set up to invest in major conurbations in Sweden, Denmark, Finland, and Norway, using a multi-sector approach.
This follows the very strong performance of Teesland's U.K. multi-sector fund Osprey, which tops the AREF index over one and three years and also Teesland iOG's EHI fund where investment in the Nordic region has been particularly successful.
Teesland iOG is expecting to raise 280 million equity from institutional investors, with a minimum subscription of £10 million. Teesland iOG is forecasting a cash return in excess of 8%, after initial costs, from the Fund and is targeting an IRR of 12-14%.
This will be the first of a series of high-yielding multi-sector and specialist funds that Teesland iOG expects to launch in Continental Europe. It is in line with its strategy of both utilising and continuing to expand its European platform, providing a network of Teesland iOG people who are able to source and execute transactions, as well as provide extensive asset management. Teesland iOG will identify markets where there is good growth potential and enter those markets early using various warehouse facilities to assemble 'seedcorn stock', ahead of fund launch.
Over the last nine months, Teesland iOG has assembled a 452 million portfolio of 62 properties in the Nordic region. These have been held in Scarborough Continental Partners, a 50/50 joint venture between Scarborough Property Holdings plc and Bank of Scotland. The portfolio will be transferred into the Fund at independent valuation by DTZ.
The latest addition to the portfolio was the acquisition this week of a SEK 1.1 billion (120 million) Swedish portfolio acquired from the Merrill Lynch Global Principal Investment Group. It comprises seven properties in Solna, Stockholm and Sundbyberg in Sweden, totalling some 86,300 m² of warehouse and office accommodation with ancillary retail and restaurant space. It is let to 61 tenants including Stockholm Municipality and National Rail and produces a current yield of just over 8%, rising to 8.3% when fully let.
Paul Oliver, Chief Investment Officer - U.K., promoter and manager of Osprey, is also sponsoring Nordic Activ. Teesland iOG will also manage the Fund, led by David Seddon (Chief Investment Officer Europe). Acquisitions and asset management will be handled by Michael Bruhn, Head of Teesland Nordic and his team of over 40 managers based in the region.
Paul Oliver commented: "From our pre-marketing of the Fund we have experienced significant demand from both UK and European institutions and interestingly, also Scandinavian investors."
He added: "We initially considered launching Nordic Activ as a public company but, despite the growing demand for listed property funds over the past 12-18 months, the recent volatility in the quoted arena led to the decision to make this a private offering. With the potential for good performance in European property markets, there is understandably a substantial amount of this type of equity still available for the right product, especially where there is an already assembled portfolio. In the future, I do believe, however, that this type of property and style of approach would also suit a REIT structure should that be made possible by amendments to the currently proposed legislation."
Commenting on Teesland's strategy, David Seddon said: "The central factor in Teesland's strategy for growth is its ability to use its European network as a platform from which we can launch multi-sector or specialist funds that focus on geographic areas. The key to our success is our ability to identify growth potential early; to warehouse portfolios and most importantly, to source stock through our presence on the ground."