Some of South Korea’s best-known investors have trekked across the North Pole to find partners for the largest ever single-asset office investment in Finland’s history.
A pair of Korean brokerages – NH Investment & Securities and Shinhan Investment Corp – have joined forces with Helsinki-based pension provider Varma Mutual Pension Insurance Company to purchase Gebhardinaukio 1, a landmark office project in the Finnish capital, for €480 million ($530 million), according to statements by participants in the transaction.
The Korean-Finnish investor consortium has agreed to buy the campus-style building, which is the largest office property in Finland, from local banking and insurance giant OP Financial Group under a sale and leaseback agreement.
Snapping Up Finland’s Largest Office
“The weight of global capital targeting the Helsinki office market is significant and liquidity is at an all-time high, as evidenced by this record-sized transaction,” said Henrik Calton, CBRE’s head of property investment in Finland, whose team advised OP Financial on the transaction.
Based on the property’s 74,150 square metres (798,144 square feet) of net leasable area, the consortium is paying €6,473 per square metre for its slice of Helsinki’s finance district.
Currently headquartered in the building, OP Financial Group will remain in situ under a long-term lease.
Gaining an Attractive Yield in a Transparent Business Environment
NH Investment & Securities and Shinhan Investment Corp have underwritten a combined KRW 250 billion ($210 billion) to fund the acquisition, according to The Korea Economic Daily, which also reported that Varma Mutual Pension Insurance Company is providing an unspecified amount, with the remainder borrowed from local Finnish institutions.
Seoul-based AIP Asset Management teamed up with Helsinki-headquartered Avant Asset Management to act as co-investment managers on the deal, according to CBRE.
Located at Gebhardinaukio 1 in the Helsinki financial hub of Vallila, the property is tenanted by OP Cooperative – the central governing entity of OP Financial Group – together with the tax department of Finnish state-owned real estate asset manager Senate Properties.
Designed by architectural firm JKMM Architects and made up of seven connecting buildings with tilted sides, the avant-garde property was completed in 2017 and accommodates approximately 6,000 employees.
“We have tremendous confidence in the Helsinki market for a number of reasons, including the comparatively attractive yields, strong liquidity, and transparent business environment,” said AIP Asset Management’s CEO Danny Kim, who was formerly the head of NH Investment & Securities’ real estate division.
OP Financial Group’s CFO Vesa Aho noted that the timing of the transaction coincided with long-term interest rates and property investors’ net yield requirements in Finland reaching record lows.
Koreans Continue to Chase European Assets
The consortium has chosen to make their investment in Helsink’s financial centre of Vallila in the wake of a record-breaking year for overseas acquisitions by Korean investors.
The East Asian nation’s spend on European real estate assets more than doubled last year to €12.5 billion from €5.6 billion in 2018, according to Savills.
“Thanks to a perfect storm of factors such as a favourable currency exchange rate between the euro and the won, relatively cheap European debt, the domestic property market in South Korea as well as the relatively stable political climate in Europe have meant that capital has flowed into the European real estate market,” said the property services firm’s co-head of EMEA regional investment advisory, Tristam Larder.
Just six months ago, NH Investment & Securities joined a consortium of investors, which also included Korean asset manager Mastern Investment Management, which was acting on behalf of its compatriots from Hana Financial and Meritz Securities, in acquiring the 571-room Vienna Hilton in Austria for €370 million.