Valad wins mandate for €480m Nordic portfolio

Kefren Properties, a Nordic property investor which failed to pay interest to bondholders on a €480 million portfolio of Swedish properties, has agreed with Valad’s European business a five-year asset management deal.

Valad Europe, the European property fund and investment manager, has been drafted in by Kefren Properties as an asset manager on a portfolio of €480 million of properties in Sweden.

Kefren, which failed to pay interest to bondholders last year on debt taken on to buy the assets in 2008, has signed a five-year deal with Australian group Valad as part of a restructuring effort.

Valad is taking over as asset manager from property agent DTZ and local Swedish firm Scius Partners AB, with Valad having the opportunity to invest fresh equity into the assets as part of the agreement. Though this is only an option, it would take Valad closer to investing in the assets rather than simply managing them.

The Kefren portfolio comprises approximately 150 properties totaling more than 827,000 square meters of lettable area in Sweden, with about 75 percent occupancy. The portfolio consists of predominantly office assets, and also includes warehouse and retail space and was bought just two years after Kefren was formed to own, manage and develop properties in Sweden.

The appointment of a new asset manager comes in the same month as the agent to the senior loan agreed to extend a “stand still” on the loan breach until September to give Kefren time to finalise restructuring.

Lender Barclays bank had already announced it would not give consent for the bondholders to terminate the bonds for redemption giving them little choice but to push for restructuring.

In a statement, Kefren chairman, Ole Vagner, said: “We wanted an investment manager with a strong presence in the Nordic region and the right resources to work through all the complex issues of this large portfolio. Besides having extensive local knowledge in Sweden, they (Valad) are also represented in Denmark, where the bonds are listed, which ensures a good understanding of the whole structure. Moreover, Valad is specialised in commercial and industrial property management and therefore has the best possible competence to manage the Kefren portfolio.”

Marty McCarthy, chief executive of Valad in Europe, said the agreement was a further step in Valad's strategy of working alongside financial and investment partners to work through real estate portfolios.

Michael Bruhn, Valad’s head of Nordics, said: “Our priority for this portfolio will be to protect and increase rental income, reduce void levels, reduce running costs, execute capital improvement projects and prepare for a progressive disposal programme.”

This is the second time that Valad has taken on a management contract in Europe since the advent of the credit crunch.  

Earlier this year it was selected to manage European Commercial Real Estate Limited, formerly known as Kenmore Europe Limited. Parent company Kenmore Property Group went into administration in 2009.

Valad has four asset management offices in Sweden, as well as offices in Helsinki and Copenhagen, with a total of 50 people. Across Europe it employs 250 staff and runs 20 offices. Although Valad is listed as a property company in Australia, but most of its assets are in Europe.