BPT Asset Management, the Copenhagen-based firm with about €1 billion of assets under management, has struck a virgin deal for its new fund offering, BPT Baltic Opportunity.
The vehicle, which was launched in January this year and for which BPT expects to round up €100 million of equity, has bought the Lincona office complex, which is three inter-connected properties four kilometers outside capital Tallinn, for an undisclosed sum. The anchor tenant is the client services software division of Swedbank.
Head of asset management for the BPT Group, Indrek Hääl, called Lincona a “proven business location with “significant rental upside potential” as the Estonian economy continues to recover.The deal is an example of how some fund managers are beginning to invest in emerging markets again after the hiatus brought on by the 2008 economic crash.
Tarmo Karotam, manager of BPT Baltic Opportunity Fund, said: “The real estate market has corrected significantly after the crisis hit in 2008,” adding the fund was at the start of the “next Baltic real estate cycle.”
At the time of launching the fund, BPT insisted the Baltic economies were amongst the quickest in Europe to ‘politically embrace’ the economic challenges of the financial crisis, making the necessary changes and budget cuts. “The reward now shows in their macroeconomic progress fuelled by rising exports and gradually decreasing unemployment numbers,” it said.
“The recent economic correction has naturally echoed in the real estate markets where prices have dropped as much as 40 percent. These days, the market has stabilized at very attractive yield levels presenting some of the best investment opportunities in a decade.”
The investments of the vehicle are expected to generate a return of more than 15 percent by buying core property. With bank debt BPT expects to amass €200 million in Estonia, Latvia and Lithuania.
BPT was established in 2001 and manages around €1 billion of property in five funds in total. Its other offerings include the Russia-focussed BPT Arista, for which the firms aims to raise €400 million in equity.