09.01.2020

LEADING CITIES INVEST purchases two fully let newly built office buildings in Helsinki

  • Both properties are aiming for a BREEAM rating of excellent, certifying their environmental performance
  • The open-end real estate fund has already invested in 30 properties in 22 locations across 9 countries

The LEADING CITIES INVEST is now also represented in the Finnish capital Helsinki. Just before Christmas, the KanAm Grund Group’s open-end real estate fund purchased two parts of the Fredriksberg office projects in the Konepaja district of Helsinki. Long-term leases have already been concluded for part of the space with the City of Helsinki and Vattenfall Oy, the Finnish subsidiary of a Swedish state-owned energy company. The property will be fully let in the fund upon completion in the first half of the year, as the seller has given a two-year rental guarantee for any vacant space. The plan is for the project to receive a BREEAM rating of excellent to certify its environmental performance. The property’s location promotes the use of the public transport and commuter systems, and offers joint facilities and services promoting sustainable development. With a portfolio of now 30 properties, LEADING CITIES INVEST already holds investments in 22 locations across nine countries – Germany, Belgium, France, the United Kingdom, Switzerland, Poland, Spain, Ireland and Finland. With a return of 3.4 percent on December 31, the target return of 3 percent per year was once again exceeded in 2019.

According to the C-Score-Model, Helsinki is a Leading City International in Western Europe. In the latest assessment in 2019, it reached 4.4 out of a total possible score of 9 in the office property aspect, giving it a “good” rating. In the structural component, Helsinki was awarded a score of 1.5 out of a possible 3. Remarkable features highlighted by the assessment were a very stable legal framework, a population size of 1.6 million inhabitants in the metropolitan area and the prognosis of high population growth in the coming years.

In terms of location quality, Helsinki scored 2.1 of a possible 3. Helsinki is the capital and the seat of government of Finland. The city boasts a high proportion of international retailers and scores in terms of sustainability thanks to an affordable public transport system and low air pollution. Helsinki is a very innovative city that not only offers high quality of life but also a large and highly qualified workforce. In terms of the “Office Property Market”, Helsinki received 0.8 of a possible score of 3 in the current C-score valuation. With around 9 million square meters of office space, this office property market is one of the larger property markets in Europe. The annual rolling net absorption rate is high and has increased over the previous year. The vacancy rates, though above average, show a downward trend. Construction rates over the next two years are low, at around 3 percent. Top yields in European comparison are relatively low but are currently showing a sufficiently high risk spread to government bonds.

C-Score-Model Source: KanAm Grund

The property is located in the Vallila neighborhood about 2.5 kilometers north of the Central Business District. The property is located near the roads Sturenkatu, Aleksis Kiven Katu and Toellisuuskatu. Vallila is a former industrial area, which has undergone comprehensive transformation over recent years, turning it into one of Finland's most important office districts. Around 25,000 people work in the sub-district of Vallila, which is also surrounded by one of Finland’s most densely populated residential areas.

The real estate portfolio of the LEADING CITIES INVEST is notable for its extremely broad diversification, ranging from offices, industry/logistics and retail/gastronomy to the hotel trade and leisure facilities, and 97.8 percent rented, which corresponds to a full rental. Together with the striking level of dynamism associated with transactions, a high occupancy rate is a clear indication of the profitability of the fund. After changing the energy supply from a sustainability perspective in 2019, the LEADING CITIES INVEST has already saved 1,821 tons of CO2. In the current real estate fund rating of the Scope rating agency, the excellent quality of the LEADING CITIES INVEST was distinguished with the third consecutive awarding of an a+ AIF rating, and the asset management rating of the KanAm Grund Group was raised to AA- AMR.


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