EUR 19m senior loan to a large and nearly vacant retail/office property in a high street location in a major city in Finland
The starting point in 2015:
Owners in financial distress with a mixed-used property portfolio in Sweden and Finland
Loans defaulted
Finnish real estate market is highly illiquid with poor assets being practically unsaleable in outright transactions
Loan value at the time was grounded on a single lease (approx. 20% of the building) to a strong covenant (retail tenant)
The situation we were faced with:
The shareholder was stressed and not able to provide additional funds (CAPEX) necessary to reposition the property and attract new tenants
Property in a good location, but largely vacant and with a significant maintenance backlog
No investor appetite existed for this type of asset
Management of the portfolio had been outsourced to third parties with limited oversight or control from current owners or lenders
Where Reviva added value:
Created a workout strategy and business plan after having examined the property and its location
Found a reputable local JV partner that was able and willing to invest 25% into the deal
Along with the JV partner, changed the local management and obtained the full understanding of the maintenance backlog and options
Facilitated a CAPEX funding line in relation to secured long-term tenancies
Managed to secure 97% occupancy under long-term lease terms (5-17 years) with strong covenants (weighted average lease term is 10 years) at end of 2018
Created a marketing/sales strategy for the building that was presented to the market in Q4/18
Outcome:
At start of 2019 the property was generating NOI of EUR 1.8 million p.a. and there were several buyers interested
The building was sold in March 2019, resulting in a full recovery of the outstanding loans