The Finnish Property Market 2012 - KTI

Photo: NCC / Sini Pennanen
28
The Finnish Property Market 2012
Real estate fund management companies
There are currently some 13 significant Finnish fund
management companies offering non-listed funds for mainly
domestic institutional investors. The first major Finnish
property fund was launched by CapMan in 2005. Since then,
some 25 new funds have been started.
Most of the Finnish non-listed property funds are
structured as limited partnerships, which is a favourable
structure from taxation point of view for domestic
institutions. Access to third-party specialist management,
as well as to leveraged property investments, are the main
motivations for investing in non-listed funds for the Finnish
institutions.
Finnish property fund management companies have
divergent backgrounds, which also affects their strategies
significantly. CapMan, which currently manages three major
property funds, is originally a Finnish private equity company
for whom property investment is one of the business areas.
Aberdeen Asset Management, which manages three Finnish
funds, is a global investment management company. Pohjola
and Tapiola are traditional Finnish institutional investors
that have organised their property investment management
in separate companies. These companies have also expanded
into the fund management business. They offer funds to
their shareholders and other investors. Tapiola has launched
four funds with differing strategies. Pohjola manages two
funds investing in Finnish properties, as well as a fund of
funds investing abroad.
ICECAPITAL, Auratum and Evli are examples of Finnish
investment banking and management that currently offer
property funds for their clients as one alternative asset class.
ICECAPITAL’s real estate funds are specialised in residential
investment. Of their three funds, two invest in Finland and
one in St Petersburg. Auratum’s funds are typically smallish,
specialised niche funds that cater to client needs. Auratum
has increased its portfolios recently through acquisitions of
office properties with redevelopment potential.
Many of the Finnish funds can be considered as club-deallike
or joint venture arrangements where a limited number of
investors join forces to establish a property fund for specific
purposes. Examples of these kinds of arrangements include
Exilion, NV Property Investment, AB Forum Capita and PE
Property Fund. These management companies typically
have relatively small organisations and operate in close cooperation
with their investors.
International investors
Between 2003 and 2011, more than 70 foreign property
investors entered the Finnish property market. The inflow
of foreign capital to Finland was at its highest level in 2006
and 2007 with dozens of new investors entering the market
in both years. During 2009–2011, however, only five new
foreign investors entered the market, with PRUPIM’s M&G
European Property Fund being the only newcomer in 2011.
“Foreign investors’
activity slowed down
again in 2011”