OSLO (Reuters) - Norwegian Property ASA (NPRO.OL) has agreed to sell Nordic hotel property firm Norgani Hotels AS to Sweden-based real estate firm Pandox AB and its Norwegian owners for around $1.33 billion, the real estate group said.
“A sale now of Norgani is definitely the right move for Norwegian Property, allowing us to...realign our balance sheet relative to the possibilities we see in the office real estate business,” Chief Executive Olav Line of Norwegian Property said in a statement on Tuesday.
The group operating in the Nordics has since February worked to split its commercial and hotel operations and develop them separately into leading players as both markets are set to grow.
The agreed purchase price is 8.3 billion Norwegian crowns ($1.33 billion) in cash, which compares to a book value as of June 30 of 8.9 billion crowns, Norwegian Property said.
“We are very satisfied with the price and the commercial terms of the transaction, especially in light of the current capital market environment,” Line said.
Norgani owns 73 hotels and one conference center, with 41 of the properties located in Sweden, 14 in Norway, 16 in Finland and 3 in Denmark. The hotels have a total of 12,884 rooms and a lettable area of around 671,000 square meters.
Pandox AB is owned by the Norwegian companies Eiendomsspar AS and Sundt AS. Pandox and a joint venture between Eiendomsspar and Sundt are joint purchasers in the deal, and have already concluded their due diligence, Norwegian Property said.
With the purchase of Norgani, Pandox will become a leading European hotel real estate owner with ownership in 119 hotels with around 24,000 rooms in Sweden, Finland, Norway, Denmark, Germany, Belgium, Switzerland, Bahamas and Canada.
Closing of the transaction is expected to take place in the fourth quarter of 2010, subject to the parties agreeing a full board approved share purchase agreement, completion of debt financing and approvals of relevant competition law authorities.
“Norwegian Property has agreed to provide vendor financing of approximately 0.6 billion crowns to the purchasers, subject to certain adjustments dependent on the final debt financing established by the purchasers,” Norwegian Property said.
It added that for financing of the deal the purchasers would build on the work carried out by Norwegian Propery with its lending banks in conjunction with the separation process.
(Reporting by Richard Solem; Editing by Louise Heavens)
$1=6.234 Norwegian Crown