International investment companies are now buying and renovating public real estate

Social real estate in Finland is traditionally owned by municipalities. A rapid transformation is underway, with private investment companies buying up hospitals, care homes, schools and courthouses. Investors are often international.

“The phenomenon is welcome. Public buildings often have a large backlog of renovation debt, which the new owner is committed to managing. Investment companies are responsible owners,” says Thomas Luther, CEO of LeaseGreen.

When a municipality sells a property, the buyer is often required to carry out renovations and reduce climate emissions, for example. Responsible buyers are strong in the tendering process. Typically, a long lease is signed with the municipality and the operation of the property continues unchanged.

“Users of the facilities will notice no difference other than the improved conditions. At the same time, the costs of heating and maintaining the building are reduced. Since the municipality, as the tenant, continues to pay these bills, the savings are directly felt in the taxpayers’ pockets,” says Luther.

A good example is the Hemsö renovation project at Turku City Hospital. Hemsö is carrying out a major energy renovation of the hospital’s three main buildings, which will improve indoor air quality and significantly reduce the hospital’s energy costs and carbon dioxide emissions. The project is designed and implemented by LeaseGreen.

“We are installing two large geothermal systems that will replace about half of our district heating consumption. This will reduce carbon emissions from heating by 44%, or around 300 tonnes per year. We also replaced the ventilation and building automation systems,” says Mika Kvist , Head of Technical Management at Hemsö Finland.

Hemsö owns, develops and operates public sector properties in Finland, Sweden and Germany. The company acquired thirteen care and hospital buildings in the Mäntymämi area from the City of Turku in 2019. The city has an average of 10-year leases with Hemsö for the use of the properties. Another major user of the facilities is the Hospital District of Southwest Finland.

“When we bought the properties, we were aware that the buildings had accumulated repair debts. In addition to energy renovation, we do a lot of mandatory renovation work on technology that has reached the end of its useful life,” says Kvist.

Around 70 energy wells will be drilled on the city hospital site to a total depth of more than 20 kilometres. The result is a hybrid system of geothermal and district heating, optimised for energy savings, cost-effectiveness and reliability. Heat recovery is installed in the ventilation system.

“In hospitals, the air has to change frequently. The buildings have high-efficiency extractors, each removing up to a cube of air per second. Up to now, the heat from the exhaust air of the twelve extractors has been wasted, but in future it will be fed into the heating system,” says Kvist.

The three main buildings of the hospital date back to 1934, 1968 and 1984. They include a clinic, a health centre and several specialised health care units.

LeaseGreen will be responsible for the design and implementation of the major project on a turnkey basis. In addition, the site’s building services will be continuously remotely managed using digital twins. It will allow future optimisation of energy consumption and conditions and ensure that the targets set are met.

The project is a continuation of the cooperation between LeaseGreen and Hemsö on large and demanding projects.

“We have been very pleased to work with the Helsinki Court House, which is also undergoing a major energy efficiency project. It felt natural to continue working together in Turku,” says Kvist.

The energy renovation of the City Hospital will start at the end of 2021 and will be completed in early 2023.

“We like big and challenging sites. We also have a lot of experience. The hospital has a particular focus on the safety of the users of the buildings – patients, doctors and nurses. The ventilation, heating and building services have to work reliably at all times,” says Thomas Luther.

Hemsö started the renovations in Mäntymämiye by carrying out a renovation of building 10, which was completed in spring 2021. The company is also planning various improvements and energy renovations to other buildings.

Further information

Mika Kvist, Head of Technical Management Finland, Hemsö
+358 50 307 2943
mika.kvist@hemso.se

Thomas Luther, Managing Director, LeaseGreen
+358 40 5344 256
thomas.luther@leasegreen.com