The acquisition of Fabege AB (publ)

The acquisition of Fabege AB (publ) Näckebro's strategy is to manage and develop properties in Stockholm, Malmö, Gothenburg and London. The acquisition of Fabege means that more than half of the Group's book value, space and contracted rental income is located in Stockholm. The total addition to the portfolio is 67 investment properties and six development properties or sites. The majority of these properties are located in central Stockholm. In view of current demand for commercial premises, these properties are very well situated and they will form the core of Näckebro's strategic property portfolio in Stockholm. Fabege comprises three other parts: - Fabege International has only one property, the World Fashion Centre in Amsterdam. This contains a total of 67,000 sq. m. of lettable space and consists of three buildings. The property market in Amsterdam is in a period of strong growth, but this is not a strategic market for Näckebro. The property will be sold when the time is right. - CarPark is Scandinavia's largest private parking company with operations in Sweden, Norway and Denmark. This operation provides good profitability and the future for the parking market appears bright. In 1996 the company's turnover was SEK 323 M and profit after financial items amounted to SEK 25 M. On the other hand, CarPark does not belong to Näckebro's core business and the company will be sold when an attractive price can be obtained. Handelsbanken Markets is engaged as advicer. - Fabege Finans consists of a small finance business divided into two parts. These are some small loan stocks which are expected to be sold before year-end and an involvement with Finans Skandic in the USA concerning an office property in central New York City. Fabege owns onethird of this property which will be sold at a suitable time. Fabege's property management is conducted today by its own staff. Näckebro's strategy is to conduct property management with a small team of company employees with high competence within strategic areas. Other functions are complemented through close co-operation with local, external management companies. Näckebro intends to remain true to its management philosophy. This means that the entire management of Fabege's Stockholm portfolio will be conducted by an external service company. The Fabege employees affected by this, a total of 25 people, will be offered work with the service company. Näckebro will, however, keep Fabege's marketing and leasing staff of four people. In conjunction with the reorganisation, Näckebro will move to a new head office in its own property at Regeringsgatan 65 in Stockholm. Taking into account the value of Näckebro's bid for Fabege totalling approximately SEK 2,200 M, the properties in Fabege were valued in the acquisition analysis at SEK 5,500 M. This includes a downward adjustment in the value of the World Fashion Centre. No goodwill arose from the acquisition. The Board of Näckebro has decided to shelve the question of a new issue for the time being. In the interim, the sale of non-strategic assets booked at the value of SEK 3 000 M will be accelerated in order to strengthen the equity/assets ratio. In addition to the direct acquisition costs, included in the purchase price, restructuring costs of a non-recurring nature as a result of the acquisition are expected to amount to SEK 35-45 M. These include severance pay, the new head office, and organisational and systems adaptation. These costs will be charged to 1997 earnings in the fourth quarter. Synergy gains resulting from the merger are expected to amount to SEK 20-30 M per year. These effects will include reduced staff and administration costs and enhanced efficiency in property management. In addition, there is an unutilised loss carry forward of more than SEK 1,000 M. For further information, please contact: Lennart Schönning, Chief Executive of Näckebro AB Telephone +46-8-459 20 01 Per Leopoldson, Chief Financial Officer Telephone +46-8-459 20 10


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