European High Income Fund lettings, Denmark
The European High Income (EHI) Fund is a pan-European fund invested in multi-let light industrial property, with assets in Denmark and other European countries. With the Fund coming to the end of its life in 2015, agreements were reached with our investors and banking partners to extend its life and concurrently refinance the portfolio.
At the time, the Danish portion of the EHI portfolio had a 28% vacancy and low weighted average lease expiry, making it a difficult proposition to negotiate a new loan facility with a lending partner. The local asset management team in Denmark undertook an active asset management strategy to improve the weighted average lease expiry and income stability of the portfolio.
This included agreeing lease renewals with the Fund’s largest tenant, Nilfisk-Advance, on more than 20,000 sq m of space at two different assets. The team’s strong relationship with the tenant enabled them to quickly establish the company’s long term intention to remain in occupation and ensure the renewal process ran smoothly.
Furthermore, in response to market demand, the team changed the leasing strategy on some assets, splitting larger warehouse units into smaller units appealing to a different occupier segment. As a result of this activity, the void on the portfolio was reduced by around 8% in an 18 month period.
The EHI Danish portfolio was subsequently refinanced with a DKK 305 million facility underwritten by SEB, to match the new maturity date for the Fund.