Information on the Target

Erikoissijoitusrahasto eQ Yhteiskuntakiinteistöt has sold two elementary school properties located in Otaniemi, Espoo, to the Norwegian company Public Property Invest ASA (PPI) for a transaction value of €37.1 million. The properties, covering a total area of approximately 10,000 square meters, are predominantly leased to the City of Espoo, with 94% of the space currently under lease agreements. The average remaining term of these leases is 14 years. Recently, the properties have undergone renovations and have achieved the BREEAM Very Good certification.

Industry Overview in Finland

The Finnish real estate market, particularly in the sector of public properties, is witnessing an increasing demand for well-positioned assets. This trend is driven by a need for sustainable and functional spaces that accommodate public service needs, especially in urban areas. The public sector's commitment to maintaining and improving its facilities has made these property types attractive for investors.

Moreover, the Finnish real estate market benefits from a stable economic environment and a growing population in urban centers, such as Helsinki, Espoo, and Vantaa, which supports ongoing investments in public infrastructure. This sector has drawn interest not only from local investors but also from overseas players looking to diversify their portfolios with secure income-generating assets.

As of 2023, institutional investors are increasingly prioritizing environmental, social, and governance (ESG) considerations in their investment strategies. Properties that meet sustainability certifications, such as BREEAM, are in high demand as they align with investors' long-term goals of fostering responsible investment practices.

The Rationale Behind the Deal

This transaction illustrates the strong demand for public-use properties with favorable locations in the transaction market. The pricing aligns with current market perspectives, suggesting confidence in the stability and profitability of such investments. Post-transaction, eQ Yhteiskuntakiinteistöt retains a portfolio valued at approximately €200 million in Otaniemi, indicating a strategic decision to optimize its asset allocation.

Information About the Investor

Public Property Invest ASA is a Norwegian real estate company listed on the Oslo Stock Exchange and has made its first investment in Finland with this acquisition. As a company focused on public properties, PPI aims to expand its presence in lucrative international markets by capitalizing on the growing demand for public assets, further diversifying its investment portfolio.

View of Dealert

From an analytical perspective, this deal represents a strategic move for both parties involved. eQ Yhteiskuntakiinteistöt successfully capitalized on a burgeoning market by divesting assets while maintaining significant holdings in the area, ensuring continued revenue streams and investment capacity. The sale allows them to refresh their portfolio and possibly reinvest in other growth opportunities within the community.

On the other hand, Public Property Invest ASA is well-positioned to realize the benefits of this investment in the long term. By entering the Finnish market with properties that meet high sustainability standards and are secured with long-term leases, PPI is mitigating risks typically associated with new market entries.

Given the current demand for public-use properties in Finland, this investment transaction could be seen as a smart acquisition, paving the way for PPI's growth in the region. Observers can expect PPI to leverage its operational experience to manage these assets effectively while contributing positively to the community.

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