NPRO: Norwegian Property strengthens position at Aker Brygge and frees up capital through property sale
Norwegian Property has entered into an agreement with KLP to perform a property swap which involves KLP’s sections in Bryggetorget 1 at Aker Brygge (“Fondbygget”) and C.J. Hambros plass 2 (“Ibsenkvartalet”) owned by Norwegian Property. With this transaction, Norwegian Property confirms its position as majority owner at Aker Brygge and strengthens the company’s financial position and freedom of action.
The transaction model implies that Norwegian Property acquires KLP’s sections in Bryggetorget 1 for NOK 620 million. Simultaneously, KLP acquires the companies owning Ibsenkvartalet to a price of NOK 1 220 million, which is NOK 22 million higher than book value as per 30 September 2011. A deduction of NOK 10 million is made as a result of the tax position of the companies owning Ibsenkvartalet, and consequently Norwegian Property will receive NOK 590 million in cash compensation in connection with the property swap.
The proceeds from the property swap may be used as repayment of debt and release of liquid assets. Reduced debt in combination with increased liquidity is estimated to reduce the company’s loan to value (“LTV”) by approximately 1.5 percentage points. As a result, net LTV would be reduced from 60.2 per cent at the end of 3Q 2011 to 58.7 per cent pro forma at the end for 3Q 2011. Alternatively, the proceeds may be deposited in a suspense account in order to keep the facility for future use in another property transaction.
CEO of Norwegian Property Olav Line says in a comment:
“We are pleased to have reached an agreement with KLP to exchange two high-quality properties, both with attractive location and solid, long-term leases.
With a central location at Aker Brygge in Oslo and a considerable potential for further value creation, Bryggetorget 1 lies right within the core business and geographical priority area of Norwegian Property. Norwegian Property has a declared goal of creating a revitalized Aker Brygge, with a holistic approach, featuring quality and a friendly, local atmosphere. Bryggetorget 1 will be central in the development of the new Aker Brygge.
At the same time, Norwegian Property disposes of a property which is for the most part fully let with long-term leases, and consequently a limited potential for increased rent levels in the medium-term perspective.
The agreement involves an additional strengthening of Norwegian Property’s financial position. This makes us well-equipped to carry out the investment projects which are planned for the portfolio.”
After completion of the transaction Norwegian Property will own all office sections in Bryggetorget 1, corresponding to 35 of a total of 100 sections. This implies that Norwegian Property acquires five out of a total of 12 floors in the building. Total area acquired exceeds 12 000 sqm of a total area of approximately 20 500 sqm for the building as a whole, which in addition to the office floors consists of retail, restaurants and residences.
Bryggetorget 1 was completed in 1989. The largest tenants are Det norske oljeselskap, DnB, Konstali Bemanning, Assuransegården (Gard) and Leon Eiendom, and annual rent for 2012 based on existing leases is approximately NOK 36.5 million. In addition, the property has vacant space of circa 1 650 sqm. Norwegian Property takes possession of a property with potential for value creation arising from, among other factors, future letting of vacant space and more efficient utilization of common space. Existing leases have an average remaining duration of 6.3 years.
The property which is disposed of, C.J. Hambros plass 2, has a total area of 38 030 sqm and was built in 1996/1997. The property is mainly fully let. Annual rent based on existing leases is NOK 68.9 million and the leases have an average remaining duration of 7.1 years.
This information is subject of the disclosure requirements acc. to § 5-12.
For additional information, please contact:
Svein Hov Skjelle, EVP & CFO, tel +47 930 55 566, firstname.lastname@example.org
Elise Heidenreich-Andersen, SVP IR, tel. +47 951 41 147, email@example.com
Norwegian Property is a focused and fully integrated office property company with 47 properties located in the Oslo area and Stavanger in Norway. The portfolio, which has a total fair value of NOK 15.6 billion, is characterized by central location and attractive premises with low vacancy and high quality tenants. The group’s properties consist largely of office premises, associated warehousing and car parking, as well as retail and catering space. The company has identified four value drivers for long-term value creation; Marketing & letting, Property management, Property development and Transactions & finance.
Norwegian Property is listed on Oslo Stock Exchange with the ticker NPRO.