Finland's first real estate equity fund
Investing in the real estate markets of the Baltic countries, EPI Baltic I Ltd was Evli's and also Finland's first real estate equity fund at the time of its establishment in April 2005.
EPI Baltic I provided Finnish investors with an opportunity to engage in the internationally popular practice of investing in properties through real estate funds, without an equity market risk. Previously in Finland, real estate could only be invested in by means of direct investments or via the equity markets.
The fund was closed in December 2005, and no longer accepts new investors.
Fund overview
EPI Baltic I Ltd is a closed real estate equity fund, organized as a limited liability company. The fund invests its assets in business premises in the Estonian, Latvian and Lithuanian real estate markets through its local subsidiaries. The investment portfolio is managed by Finland’s leading expert in the real estate sector, Catella Property Oy. Evli Property Investments Ltd is the management company for the fund.
The fund was closed in December 2005 when its equity finance capital reached the designated EUR 50 million maximum amount. As a consequence, the fund no longer accepts new investors.
| Fund: | EPI Baltic I Ltd | | Fund type: | Fixed-capital (closed) real estate equity fund | | Legal structure: | Finnish limited partnership | | Closing of the fund: | December 2005 | | Investment period: | 2 years after closing of fund | | Fund’s operating period: | 7 years (+ possibility for extension) | | Geographical weighting: | Estonia, Latvia, Lithuania | | Main types of premises: | Commercial, office, industrial and storage | | Fund’s target size: | EUR 100-150 million | | Equity: | EUR 50 million | | Loans: | No more than 75% of real estate porfolio’s acquisition cost | | Return target: | 10-12% leveraged internal rate of return (after expenses, fees and corporate tax, excluding value appreciation) | | Minimum subscription: | EUR 50,000 | | Commitment fee: | 0,5% of the investor's commitment | | Annual management fee: | 1,25% of the portfolio acquisition value | | Annual return-related fee: | 20% of the part of the fund’s annual return that exceeds 8% |
Investment strategy
Real estate portfolio
EPI Baltic I invests its assets in business premises in the Estonian, Latvian and Lithuanian real estate markets through its local subsidiaries. The fund focuses on commercial, industrial and logistics premises.
The aim is to diversify the fund's real estate portfolio among various sectors and geographical locations, making the best possible overall portfolio in terms of market situation and available investment possibilities. In a two-year investment period, the fund aims to compile a real estate portfolio from different parts of the Baltic region.
The manager of the real estate portfolio, Catella Property Oy, is responsible for providing advice regarding the purchase of investment property and for managing the real estate portfolio. The advisory work includes tracking the market, looking for suitable property sites, analyzing and compiling development strategies.
Return objective
The objective of the real estate equity fund is to achieve a cash-flow-based average annual return on equity of 10-12 per cent. The fund’s investment strategy is cash-flow-centered, but the development phase of the Baltic real estate market provides the fund and its investors with opportunities to capitalize on the appreciation of real estate assets.
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