Interview: Timber transactions ahead for new Cromwell venture
The summer sun is dappling through the forests of southern Finland and the team behind the first pan-European wooden building fund are meant to be on holiday.
Pertti Vanhanen, Cromwell Property Group’s new European managing director, is supposed to be enjoying traditional Finnish holiday activities, he says: berry-picking, swimming in the lakes, chopping logs. He is close to the crystal-blue waters of Lake Puruvesi, across which he can just see the church at Kerimäki, one of the largest wooden churches in the world.
His old friend and now business partner is Olli Haltia, founder and chief executive of Dasos Capital, which holds €1bn (£864m) of investment in timber assets including packaging and housebuilding. He is by the coast to the south-west. The centuries-old wooden village of Tammisaari is the perfect place for a well-earned rest.
The summer sun is dappling through the forests of southern Finland and the team behind the first pan-European wooden building fund are meant to be on holiday.
Pertti Vanhanen, Cromwell Property Group’s new European managing director, is supposed to be enjoying traditional Finnish holiday activities, he says: berry-picking, swimming in the lakes, chopping logs. He is close to the crystal-blue waters of Lake Puruvesi, across which he can just see the church at Kerimäki, one of the largest wooden churches in the world.
His old friend and now business partner is Olli Haltia, founder and chief executive of Dasos Capital, which holds €1bn (£864m) of investment in timber assets including packaging and housebuilding. He is by the coast to the south-west. The centuries-old wooden village of Tammisaari is the perfect place for a well-earned rest.
But who has time to rest? Cromwell and Dasos have announced the birth of their new €1bn fund, overseen by newly appointed fund manager Eeva Saravuo. Since then the phones have been ringing off the hook.
“It is holiday season and I am getting calls all the time, from investors, developers and architects,” says Vanhanen. “I tell you, I have been involved in 20 fund launches or so, and I don’t remember there being so much interest in a fund launch. Ever.”
Wood work
Like the best timber, the idea of the fund has been growing for some time. “Olli and I have known each other for 10 years. We have been talking about this for years,” says Vanhanen. “One day, while chopping wood, we realised we both had a dream to build a wooden building-based property fund. I’m the property guy, he is the wood guy.”
That first conversation was five years ago, but then was not the right time, says Haltia. “The scalability was not there. When Pertti joined Cromwell, we knew that the time was right. The market is ready, and we are ready as well.”
Saravuo worked with Vanhanen at Aberdeen Standard Investments, where she managed Finnish and Nordic funds and Vanhanen was global co-head of real estate, until he left late last year to head Cromwell’s €3.5bn European platform.
Saravuo says the fund will look to allocate €170m to €180m in its first 24 months. And while Dasos has been evaluating opportunities in Finland, Cromwell already has a list stretching across Europe and the Nordics. “In Austria and the Netherlands there are several suitable assets at around €25m to €50m,” Saravuo says.
“If you look at the Nordics, there are a lot of projects in the pipeline – schools, offices, all sorts of asset classes,” says Haltia. In fact, the environmental policies of many areas in Finland state that you can only build in wood.
And now supermarkets are leaning towards wooden builds. “They want to show they are sustainable,” says Haltia. “They have made their packaging sustainable, now they want to make their buildings sustainable too.”
Choppy markets
Some of the stock is likely to be in the UK. As people understand the materials better, says Vanhanen, “reluctance to build in wood is disappearing”.
So far the trio have seen a handful of UK office investments valued at around £50m to £60m each, but these might be too big for the first investment phase. “In the first instance, we might look to smaller assets of £30m,” says Saravuo.
And it won’t just be offices. “Sectors like logistics need options to improve their sustainability credentials, and wooden buildings provide one possible solution for them,” she says. In fact, her preference would be to invest in “the robust sectors” of logistics and residential, which “would suit our wooden building fund strategy too”.
As awareness of the material grows, so will the opportunities, Saravuo says. But if there isn’t the right quality of stock in the right places then the fund will create it, “by partnering with architects or developers”, she adds.
Lack of stock is not the main concern, says Vanhanen. The real challenge will be not to grow too quickly.
“I had a call the other day from America,” says Vanhanen. “The voice at the other end of the line said: ‘We need this in the US!’
“I told them: ‘This week I’m busy. How about next week?’”
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
Main photo © Mats Vuorenjuuri/Unikuva
