Madison International Acquires 50% Stake in Oslo Luxury Retail Center
- Sep 23, 2014
Madison International is now in a 50-50 partnership with Promenaden Property AS, with Søylen Property as its majority shareholder and managers of Promenaden Property AS.
“We are very intrigued with Oslo as an investment destination,” Ronald Dickerman, Madison International’s president and founder, told Commercial Property Executive. “We continue to see an increased demand for retail in Oslo’s luxury sector.”
The deal marks Madison International’s second major investment in Oslo. In 2013, the New York City-based private equity firm acquired a 30 percent stake in a newly formed joint venture company, Promenaden Property AS, with Søylen holding the remaining 70 percent.
“Our partnership with Søylen in Promenaden Property has been highly successful and we look forward to continuing to work with them,” Dickerman said. “Schage Eiendom is a developer in Northern Europe and had other needs for capital. This was an opportunistic investment brought about by their need for liquidity.”
Dickerman noted that Oslo is about the same size as Boston or Frankfurt, Germany, and while there are about 25 luxury retailers in each of those cities, Oslo offers much less choice in the high-end category. “Up until 12 months ago, Oslo had only three” luxury retailers, he said. “It’s heavily visited by tourists—there are lots of cruise ships who come in when they are cruising around the Nordics—so it’s almost like a Fifth Avenue or Madison Avenue in New York.”
Promenaden Property owns several properties in the heart of Oslo’s premier shopping district, with fashion house Eger and Steen & Strøm being the most well-known.
Madison International increased its investment in Steen & Strøm, which Dickerman described as “the Bloomingdale’s” of Oslo. Madison International plans a major renovation that will include adding more retail space and a restaurant and upgrading the store’s marketability and curb appeal.
“One of the integral parts of our investment strategy is buying out partners and joint-venture holders in real estate ownership stakes where one party wants an early exit strategy but there may be a longer term-value creation runway,” Dickerman explained. “That’s the circumstance presented here. The opportunity came up for us to increase ownership in the flagship store.”