Agreement reached on sale of high street SC in Riga Old Town for €75 million
Newsec in the Baltics advised on the sale of the historic Galerija Centrs high street shopping centre in Riga, Latvia. The shopping centre, owned by Norwegian real estate developer Linstow, has been acquired for €75 million by Baltic Horizon Fund. It was this year’s largest shopping centre transaction in the Baltics and with this acquisition, Baltic Horizon Fund will become the largest diversified commercial real estate investment fund in the Baltics with close to €350 million assets under management.
“Newsec is pleased to have advised Linstow, one of largest Norwegian assets managers in the Baltics, on the successful disposal of a sizeable high street shopping centre in the heart of Riga in Latvia. This transaction with a listed fund, the Baltic Horizon Fund, supports our firm belief that the demand in the market for top properties is very strong, and that liquidity on the Baltic real estate market will only further improve. We’re happy to finalize a first joint project in the Baltics with our alliance partner BNP Paribas. This is in line with our ambition to grow as a pan-Baltic business,” said Andrius Švolka, Head of Transactions at Newsec in the Baltics.
Shopping centres on a main business street in a city centre are seen as among the safest investments, according to A.Švolka. They historically have tended to guarantee the most stable return on real estate investments. That is why Galerija Centrs is also known as the pearl of the Baltic retail industry. Such a designation for the shopping centre in Riga is due not just to its prestigious Old Town location or the impressive flow of visitors it generates – over 7 million a year, but also to its long-term well-known tenants. The 20,000 sqm building currently accommodates more than 110 tenants.
“Owning and managing Galerija Centrs has been a fantastic journey for Linstow. We do take pride in the development and management of complex urban regeneration projects, of which Galerija Centrs is a very good example indeed,” says Frode Gronvold, the CEO of Linstow Center Management. “This divestment will open up new opportunities for Linstow as we see ourselves as a long term investor in the region,” comments Per Tore Mortensen, CEO of Linstow AS. “Furthermore, we would like to express our satisfaction to all parties involved in this successful transaction.”
Tarmo Karotam, the fund manager of Baltic Horizon Fund commented: “We are very pleased to add such a stable landmark property to our cash-flow portfolio. After the acquisition, the fund will own a centrally located retail asset in the heart of every Baltic capital: Galerija Centrs in Riga, Postimaja in Tallinn and Europa Shopping Center in Vilnius. With this position, we strive to become a long-term prime landlord partner for top retailers in the market who look to develop their current and new brand portfolios in the Baltics”.
Galerija Centrs is a historic building in the Riga Old Town. It has been a site for retailing since as far back as 1938, and several years ago the building marked its 80th anniversary. The shopping centre was fully modernized in 2006, with an expansion of its footprint to neighbouring Ridzene Street and an updated appearance. After the renovation, Galerija Centrs became one of the first shopping centres in the Baltic countries with a glass facade. Those successful changes strengthened its position as an exclusive shopping centre in Riga.