Metropolis

Capital Markets

BACKGROUND

The City of Helsinki is one of the biggest public property developers and tenants in Finland. The city possesses significant real estate holdings, and its future goal is to reduce the risks related to owning real estate. Newsec has considerable experience of collaborating both with the City of Helsinki and with other public sector actors.

CHALLENGE

In its strategy, the City of Helsinki wants to reduce the risk associated with owning real estate. A decision was made to sell the Urban Environment House to be built in the Kalasatama neighbourhood in Helsinki, with the City remaining a tenant in the building under a long lease. This project is the first development project that the City of Helsinki has ever embarked on under its new operational model, seeking to ensure that it will have high-quality premises with a sustainable rent level for its operations without having to take the risk associated with owning real estate. The first sale and leaseback arrangement required collaboration between the city departments, both on the project development level and in the decision-making process.

SOLUTION

As Newsec and the City of Helsinki have a long history of being in engaged in highly diverse fact-finding and analysis projects, the collaboration between them was laid on a solid foundation. In the development project of the Urban Environment House, Newsec acted as a commercial advisor to the City of Helsinki in issues related to the preparation of the transaction and in the arrangement of a competitive investor tender.

The development project spanned a number of stages, with Newsec supporting the City of Helsinki on a broad range of issues: among other things, under the provision of advice fell the planning of the sales process covering the analysis and structuring of the various options, the definition of the market value of the object of the transaction, contacts with investors, the preparation of marketing materials, the provision of commercial advice on the preparation of contracts, as well as the provision of assistance in negotiations.

The City of Helsinki found it extremely important to ensure that every stage of the project was transparent. Although the transaction involved a large number of challenging elements, such as reconciling the interests of several operators and advisors with each other, and the issues related the decision-making process of a public actor, all the stages were successfully completed, as was the reconciliation of the decision-making process of the City of Helsinki with the schedule of the sales project.

OUTCOME

In conclusion, the City of Helsinki leased the premises on good terms and under a long-term lease, thereby ensuring a good working environment and customer service premises for its line of activities concerned with the urban environment. The City of Helsinki outsourced the risk associated with owning real estate by selling the Urban Environment House to German Union Investment Real Estate GMBH. The purchase price of the property was EUR 165 million, which was in line with the goals set by the City of Helsinki.

  • Summary The City of Helsinki outsourced the risk associated with owning real estate by selling the Urban Environment House building to be built in the Kalasatama neighbourhood
  • Location Helsinki
  • Customer City of Helsinki
  • Status Contract of the sale was signed in December 2018, with the building being scheduled for completion in 2020
  • Services provided Provision of advice on real estate business
Mikko Tenhola Head of Advisory, Newsec Advisory in Finland +358 40 500 1310