Listed Swedish property company Kungsleden AB (publ) has signed a letter of intent to acquire the majority of the properties held by NR Nordic & Russia Properties Ltd.
The transaction has an underlying gross property value of approximately SEK 4.4bn, of which approximately SEK 840m relates to the four properties held by Nordic & Russia Properties Ltd in Russia. The Russian properties will be acquired by Mr. Thomas Lindeborg through a fully secured back-to-back agreement. Linked to this back-to-back agreement, Kungsleden will make available a five-year EUR 27m vendor note in favour of Thomas Lindeborg. Kungsleden is at any time from now and during the duration of the vendor note, free to dispose the note to any third party. The remaining 36 properties, of which 33 in Sweden, one in Germany as well as two in Poland, are acquired by Kungsleden for a purchase price of approximately SEK 3.6bn including transaction costs. Completion of the core portfolio transaction is scheduled for 31 March 2011.
Kungsleden acquires a property portfolio consisting of 36 properties with a leasable area of 825,000 sq.m., of which 93 percent is located in Sweden. Total rental value is SEK 563m, equating to a property yield of approximately 10 percent. The acquisition, after completion, will on an annual basis contribute to Kungsleden's profit for calculated dividend with approximately SEK 200m.
The portfolio comprises of office and industrial properties and is characterised by stable returns with high quality tenants. The current vacancy rate is equivalent to 5 percent of the total rental value. The largest tenant, accounting for approximately 50 percent of rental value is ABB, followed by Finnveden AB with approximately 10 percent.
The majority of the ABB properties are located in Västerås, northwest of Stockholm, and corresponds to around 38 percent of gross leasable area. The average remaining contract length amounts to 6 years with a master lease contract expiring 31 December 2016.
The total average property yield for Kungsleden will after completion and following the divestment of SEK 809m in Ludvika, increase from 6.6 percent to approximately 7.0 percent. The Ludvika transaction was previously announced in a press release on 24 November 2010.
"I'm very satisfied that we have acquired an attractive portfolio to a good property yield. It has been an advantage for us to be able to provide NR with a solution for the entire portfolio in its realisation process together with Mr. Thomas Lindeborg who acquires the Russian properties. The properties represent a good fit to Kungsleden's existing portfolio and further strengthens Kungsleden's relationship to long-time client ABB," commented Kungsleden's Chief Executive Thomas Erséus.
The transaction is supported by the four largest shareholders in NR Nordic and Russia Properties; London & Regional Group, Weiss Asset Management LP, Laxey Partners Ltd, QVT Fund LP, as well as Mr. Thomas Lindeborg, who together represent a total of 71 percent of the shares. Preparatory work with the due diligence process will commence immediately and signing is scheduled for 31 January 2011.
NR Nordic & Russia Properties Ltd, is a Jersey based company listed on Euronext in Amsterdam with a market capitalisation of EUR 157m (approximately SEK 1.4bn).
Pangea Property Partners is acting as financial and property advisers. Mannheimer Swartling Advokatbyrå is acting as legal advisers.
Kungsleden AB (publ) discloses the information in this press release according to the Swedish Securities Markets Act and/or the Swedish Financial Trading Act. The information was provided for public release on x December 2010 at 08.30 a.m.