REAL ESTATE INVESTMENT: Sweden's Niam Ready for Baltics. Are Baltics Ready?

20 Jun 2011 • by Natalie Aster

Sweden-based Niam, one of the leading real estate private equity investors in the Nordic and Baltic regions, is building its fifth real estate fund, and this time it promises to pay due attention to the Baltic markets.

In January, Niam Nordic V opportunistic real estate fund completed its first closing when it raised EUR 125m of capital from mainly North American and European institutional investors. Additional closings are planned for completion in the course of the year to reach the EUR 600m target. This will allow Niam Nordic V to acquire some EUR 2.2bn worth of real estate assets, and make it one of the biggest opportunistic real estate funds in Europe.

The fund's focus is on commercial real estate in the Nordic and Baltic regions, including office, retail and logistics. But in the Baltics Niam sees certain obstacles for manoeuvring. "I am much more bullish than experts who predict that it will take 8-11 years for the Baltic economies to recover to pre-crisis levels. Otherwise I would not be here looking for deals," Urban Edenstrom, the main shareholder and chairman of Stronghold Group that owns Niam, told the 270-strong audience of a recent annual Baltic real estate investment conference in Vilnius.

On the other hand, he noted that Niam had EUR 300m on its hands to invest in the Baltic region compared to some EUR 50m worth of real estate transactions that actually took place in 2010. "The problem is the product that you can buy. These are hard to find. We have a mandate to invest all the money we have in Lithuania, or in Sweden. So we try to figure out how we get the best return. I hope that with Niam V we will manage to do a lot of investment in the Baltics," he told the conference.

News2biz asked Urban Edenstrom to share his further insights on the Baltic market and regional investment plans but got a reply from Niam's CEO Johan Bergman that the company has "no concrete deals ongoing in the Baltics at present, and we have no specific plans with regards to our Fund V."

Today Niam's only investment in the Baltics is Rimi Baltic food retailer's 36,000 sq.m central distribution centre and head office in Riga that Niam Fund III purchased back in 2005. Although Niam then promised to inject some EUR 200m in the Baltic region during the next few years, it never went beyond the Riga acquisition. Apart from that Stronghold is represented in the Baltics by its property broking, management and consulting arm Newsec.

The above news abstract has been taken from a bi-weekly newsletter to professionals doing business in Eastern Europe "news2biz – Property and Retail".

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