Starwood Capital Group has agreed a large investment in Sweden with the purchase of seven retail parks and shopping galerias for SEK 3.9 billion (€348 million; $593 million).
The assets that Greenwich, Connecticut-based Starwood have bought are in prime locations in the four largest Swedish cities; Stockholm, Gothenburg, Malmo and Uppsala, and have been acquired from Kooperativa Forbundet, a consumer co-operative in which the consumers own the company.
The properties are 96 percent leased and total around 2.2 million square foot. They are mainly occupied by Sweden’s second largest supermarket chain, Coop. The purchase comes with existing development licences for another 753, 480 square feet of retail space.
Others tenants include Swedish fashion chain H&M, as well as XXL, MediaMarkt, and Systembolage. So far, Starwood has negotiated the extension of four Coop leases giving the firm some comfort by nearly doubling the weighted average unexpired lease terms.
The firm is being advised by local operating partner, Vencom, which is a minority investor in the deal. Germany’s Aareal Bank and Helaba are acting as joint arrangers of the financing, the firm noted.
“These seven properties are a tremendous addition to our growing portfolio in Europe, particularly given the attractive fundamentals of these assets,” said Jeff Dishner, senior managing director and head of Europe at Starwood. “The balanced and steady growth of the Swedish economy, the prime location of these assets and the strong tenant profile fit perfectly with our investment focus,” he added.
Starwood has a new-look Europe team following the departures of Sean Arnold and Desmond Taljaard in 2011 and 2013 respectively who led investment activity and asset management activities between them. As well as Dishner moving to London in 2010, the firm last year employed Peter Denton from BNP Paribas to oversee its European debt platform and in April this year Zsolt Kohalmi joined to oversee European acquisitions. Kohalmi is the former chief investment officer at retail-focussed London-based private equity real estate firm, Meyer Bergman, where he worked for seven years. When the firm announced Kohalmi had joined, it said its aim was to “achieve a higher European presence.”
“In addition to single asset transactions, Starwood intends to increase its focus on corporate and portfolio opportunities, and is targeting a gross internal rate of return of mid-teens and above for its equity transactions,” it said.
Starwood is currently investing out of Starwood Global Opportunity Fund IX, which has more than $4 of commitments.
The firm began 2013 in Europe with the acquisition of special servicer Hatfield Philips as part of its acquisition of LNR globally for $1 billion, as well as the acquisition of Principal Hayley hotel group in the UK for £360 million (€431 million; $583 million).