Target Information

eQ Liikekiinteistöt Fund has successfully acquired five retail properties from Citycon Oyj for an estimated value of €74 million. The total lettable area of these properties amounts to approximately 47,000 square meters. Of the acquired properties, three are located in the Helsinki metropolitan area, while one is situated in Tampere and another in Turku. The primary tenants of these properties include Ruokakesko Oy and Tokmanni Oy.

Industry Overview in Finland

The Finnish retail property market has seen notable stability and growth in recent years. Driven by consumer spending and the expansion of retail brands, particularly in urban areas, the sector has garnered significant investor interest. Helsinki, as the capital, remains a focal point for retail investment, benefiting from a robust population density and high foot traffic.

Moreover, Finland's strategic location in the Nordic region is advantageous for retail expansion, as it offers access to other Scandinavian markets. The government's supportive policies and infrastructure development have further enhanced the retail landscape, making it appealing for foreign and domestic investors alike.

The softening of the digital retail landscape has also prompted traditional retailers to innovate, leading to a hybrid model where online and offline experiences blend. This shift is particularly evident in the food retail sector, where physical stores remain essential for customer engagement and fulfilment.

As a result, the demand for well-located retail properties that guarantee stable rental income has increased, rendering these assets attractive investments for funds aiming for long-term yields.

The Rationale Behind the Deal

The acquisition aligns perfectly with the investment strategy of eQ Liikekiinteistöt Fund to invest in stable and predictable cash flows derived from long-term leases in commercially viable locations. The portfolio's value significantly derives from the food retail locations in Helsinki and Espoo, which are under long-term lease agreements, ensuring consistent returns.

Samuel Granvik, Chief Investment Officer at eQ Varainhoito, articulated that the deal reflects the fund's commitment to securing assets that promise sustainable income throughout market fluctuations.

Investor Information

eQ Liikekiinteistöt Fund, operational since December 2014, focuses on Finnish commercial real estate investments. Following this transaction, the fund's total property portfolio will expand to approximately €250 million, encompassing 17 retail and office properties situated in Finland's strongest regional and growth centers.

The fund operates on a quarterly investment basis and biannual redemption schedule, with a target annual return of 6% and an overall return goal of 7-10% per year. Notably, since its inception, the fund has achieved an impressive annual return of 9.6%, reflecting its strategic investment approach.

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In my expert opinion, this acquisition by eQ Liikekiinteistöt Fund represents a strong investment opportunity. The strategic placement of the properties within key urban markets like Helsinki ensures sustained demand, coupled with the reliability of the primary tenants, which adds to the investment's credibility.

Furthermore, the emphasis on long-term leases with reputable tenants significantly mitigates the inherent risks associated with commercial property investments. The focus on established retail giants such as Ruokakesko and Tokmanni enhances the overall stability of cash flows expected from these assets.

The Finnish retail market's growth dynamics, underpinned by the increasing blend of digital and physical shopping experiences, suggest continued resilience in consumer spending and demand. This trend positions the acquired properties favorably in the long term.

In conclusion, with a solid tenant base, strategic property locations, and a strong investment management framework, the eQ Liikekiinteistöt Fund's recent acquisition stands as a promising addition to its portfolio, likely to yield favorable returns going forward.

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