GIC RE Takes 40% Stake In Finnish Mall

Source : The Business Times, 14 February 2008

Deal worth 131.6m euros; partner Citycon Oyj to manage project

GIC Real Estate, the property investment arm of the Government of Singapore Investment Corporation, has partnered Finnish retail property investment company Citycon Oyj to acquire a 40 per cent stake in a Helsinki mall called Iso Omena for 131.6 million euros (S$271.7 million).

In a statement yesterday, GIC RE said Citycon will hold 60 per cent of Iso Omena upon completion of the deal.

Citycon - which owns 22 shopping centres in Finland, eight in Sweden and three in other Nordic Countries - will be responsible for the business and management of Iso Omena.

The centre is Finland’s fifth largest and has a wealthy catchment area, GIC RE said. Its total net lettable area is 61,300 sq m, of which 49,000 sq m is retail space.

Citycon acquired Iso Omena from funds managed by private equity firm Doughty Hanson for 329 million euros in September 2007.

According to a statement released by Citycon then, the shopping centre’s net yield on the purchase price was 4.5 per cent. Citycon said that after redevelopment and other improvements, it estimated the net yield would increase. Iso Omena has planning permission for an extension of some 7,000 sq m.

Citycon CEO Petri Olkinuora said of the GIC RE deal: ‘With this agreement we will release capital for the redevelopment of our property portfolio in accordance with our strategy. This business concept may also become part of our strategy and source of capital.’

This is the third property deal that GIC RE has announced this year. Last week it entered into a joint venture to take a S$416.1 million stake in Roma Est Shopping Centre in Italy with with ING Real Estate. It also said it will develop a township on a site in Russia with a market value of US$1.33 billion.

Also last week, it was reported that GIC plans to acquire The Westin Tokyo for about S$1.02 billion.