StepStone backs Nordic RE restructuring

Seven shopping centres held in the NREP's Retail Fund 2 portfolio have been moved into a new vehicle.

StepStone‘s real estate unit has invested in the restructuring of a fund managed by Nordic private equity real estate firm NREP.

The portfolio contains seven shopping centres in a deal worth at least DKr1.4 billion ($234 million; €188 million), according to a statement. The assets were held in NREP’s Nordic Retail Fund 2 and have been moved into a new vehicle named Retail Fund 3, a spokesman for NREP told Secondaries Investor.

It is understood StepStone invested in the deal with its $700 million StepStone Real Estate Partners III.

“We are attracted to this portfolio given continued demand for well-located necessity-based retail and the positive demographic trends, strong economies and growth potential in the Nordic region and in Denmark in particular,” Josh Cleveland, a partner at StepStone Real Estate, said in the statement.

The deal included debt financing provided by Danish financial services firm Nykredit.

The transaction gives NREP additional capital and “several more years” to further develop the portfolio, said Rasmus Norgaard, NREP’s chief investment officer.

Nordic Retail Fund 2, which closed in 2013, raised about DKr4 billion, the NREP spokesman said. The fund still holds one asset in Sweden and one in Denmark that were not part of the restructuring.

NREP was advised by Cushman & Wakefield, the spokesman said.

The portfolio includes grocery-anchored shopping centres located on commuter rail and major transportation facilities in greater Copenhagen and Aarhus. The centres host pharmacies, medical offices, fitness centres, and food and beverage outlets, and some properties have residential development opportunities.

GP-led restructurings by volume rose 50 percent last year to a record $13.7 billion, according to Greenhill Cogent.

StepStone Real Estate Partners III was the first StepStone fund raised after it acquired the Clairvue Capital Partners team in 2014. Clairvue was a San Francisco-based real estate secondaries firm founded by Cleveland, Jeff Giller and Brendan MacDonald.