The new combined group will create a leading Nordic real estate company. The property portfolio is worth approximately EUR 2.6 billion with a total leasable area of approximately 2 million m².
"The acquisition supports Sponda's current strategy, the main objectives of which are growth and profitability. Kapiteeli's portfolio contains properties both within and outside the Helsinki Metropolitan Area (HMA) and their addition to Sponda's property portfolio will strengthen Sponda's ability to offer its customers better space solutions. Kapiteeli also has a diverse portfolio of property development sites with considerable potential for value growth," says Kari Inkinen, President and CEO of Sponda.
Strategic and Financial Benefits of the Transaction
The acquisition of Kapiteeli complements Sponda's existing strategy to focus on HMA assets and the Russian market. The acquisition represents an attractive opportunity for Sponda as the Kapiteeli portfolio contains a good proportion of high quality assets located in the HMA and other major Finnish cities, which will complement Sponda's existing portfolio. In addition, Kapiteeli's development activity is expected to provide a source for additional growth.
The combined group is expected to benefit from economies of scale and incremental revenue and profits from a more comprehensive offering to its clients.
Background to the transaction
The acquisition of Kapiteeli is expected to deliver significant and ongoing value creation opportunities in both property investment and development portfolios, including:
- Property investment - Kapiteeli provides a unique opportunity to acquire a portfolio of high quality offices, providing scale both in the Helsinki market and in other major Finnish cities at a time when demand is increasing.
- Property development - Access to additional major development projects in strong markets expected to deliver returns over many years.
- Economies of scale - Enhanced investment and financing strength, and cost benefits from joint property management.
Financial effects of the transaction
- Enhancing to earnings per share - Sponda expects the transaction to be enhancing to earnings per share in the first full year after closing.
- Net Asset Value (NAV) per share - Sponda expects the transaction to have a positive impact on NAV per share growth and the transaction is expected to be NAV accretive in the first full year after closing.
- Dividend - The management of Sponda expects future dividends, subject to customary board and shareholder approvals, to be substantially in line with historic levels.
Financing and Capital Structure
Sponda has facilities available from Nordea sufficient to fund the acquisition. Sponda remains committed to maintaining its strong financial profile and expects to achieve a long-term target equity to total capitalization ratio of at least 33 % in the course of the next 12 months. In order to achieve this, the company will explore alternative options to reduce indebtedness including potential asset sales and raising additional equity through a rights issue, allowing existing investors to participate in the growth of the company.
Approvals and Timing
The transaction is expected to close by end of 2006, subject to the approval of the Finnish Competition Authorities.
Advisors
PricewaterhouseCoopers are acting as financial advisors for Sponda and Merrill Lynch are acting as international financial advisors regarding capital market aspects of the transaction.
Merrill Lynch and Nordea are advising Sponda regarding capital markets options for refinancing the acquisition facilities. Veikko Palotie & Co are acting as legal advisors to Sponda in relation to the acquisition.
Media and Analyst Meeting and Conference Call
Sponda will hold a conference in Finnish for the media and analysts today, Friday 20 October, at 14:00 at Fabianinkatu 23, auditorium Saarinen, Helsinki.
An international conference call for investors and analysts will be held today, Friday 20 October, at 15:30 (EET). To participate, please call +358 20 699121. The material used in the conference call will also be made available on Sponda's website at http://www.sponda.fi/sijoittajainfo/en_GB/presentations/.
Sponda Plc
Further information:
Kari Inkinen, President and CEO, Sponda Plc
GSM +358 400 402 653
Robert Öhman, CFO, Sponda Plc
GSM +358 40 540 0741
Information on Sponda
Sponda is a real estate investment company specializing in commercial properties in the Helsinki Metropolitan Area. Sponda's business concept is to own and develop operating environments in office, retail and logistics properties that promote the success of its customers. The market value of Sponda's investment properties is approximately EUR 1.3 billion and the leasable area is 860,000 m2. Sponda's share is listed on the Helsinki Stock Exchange. The company has 58 employees.
Information on Kapiteeli
Established in 1999, Kapiteeli is a real estate investment company specializing in office and retail premises and logistics properties. The company is wholly owned by the Finnish government. The company focuses its operations on growth centres in Finland. The total leasable area of properties is 1.1 million m². The company has 90 employees.