Acquisition of Norrporten AB by Castellum AB

Castellum is one of the major listed real estate companies in Sweden. The fair value of the real estate portfolio, including Norrporten’s real estate portfolio, amounts to approx. SEK 71 billion, as per pro forma March 31, 2016, and comprises premises for office, retail, warehouse and industrial purposes with a total lettable area of approx. 4.7 million sq.m..

After acquiring Norrporten with a property portfolio of SEK 26 billion, Castellum will own and manage properties through one common brand in five geographical regions with strong local presence. The five geographical regions are: West, Öresund, Stockholm, North and Central.

Castellum’s business concept is to develop and add value to the property portfolio, focusing on the best possible earnings and assets growth, by offering customised commercial properties, through a strong and clear presence in growth regions.

Based on this business concept, Castellum has, since its initial public offering in 1997, increased the value of its property portfolio with SEK 35 billion, from SEK 10 billion to SEK 45 billion and increased its market value from SEK 3 billion to SEK 22 billion. In the same period, the annual income from property management has increased by approximately SEK 1,300 million, from SEK 300 million to SEK 1,600 million and distributions to shareholders (including dividends, share repurchases and share redemptions) have been completed to a total sum of SEK 9,400 million.

On 13 April, 2016, Castellum announced that it had entered into an agreement with Andra AP-fonden and Sjätte AP-fonden to acquire 100 percent of the shares in Norrporten. The acquisition closed on 15 June, 2016.

The acquisition of Norrporten is a very large and important step for Castellum. Not only because it increases the value of Castellum’s property portfolio with SEK 26 billion (59 percent), to SEK 71 billion, but also because of a number of other factors:

  • Castellum’s property portfolio will increase with high quality and attractively located properties in a number of growth markets, where Castellum is already established, for example Stockholm, Helsingborg and Copenhagen, as well as in a number of new markets such as Luleå, Umeå and Sundsvall.
  • The duration of the lease portfolio is prolonged, as Norrporten’s average rental lease term amounts to approximately 5.1 years, which prolongs the corresponding number for the new Group to approximately 4.1 years.
  • Of Norrporten’s rental income, approximately 41 percent is derived from public sector tenants, resulting in an increase in the number of public and community service properties.
  • Improved profitability from mutual learning regarding sustainability, where Norrporten, together with Castellum, is one of the greenest property companies in the Nordic region.
  • Larger and better positioned property portfolio, which increases the conditions for continued profitable growth through both more investments in own projects, of which a number are from Norrporten’s interesting development rights, and by the Group becoming a more interesting and strong partner for customers and municipalities.
  • Norrporten’s employees will provide Castellum with complementary skills, relating to, among others, project management, customer value and customer proximity in both existing and new markets and creates the conditions necessary for a more efficient organisation.
  • Positive effects on income from property management per share, partly from significant synergies, but also from increased growth opportunities.

Through the acquisition of Norrporten, Castellum will become a significantly larger property company with two new large shareholders, Andra AP-fonden and Sjätte AP-fonden, each with a shareholding of 5 percent respectively, through a directed issue of shares in Castellum with payment in shares in Norrporten which represented one part of the financing of the acquisition.

The acquisition will not result in any changes to Castellum’s financial targets, risk metrics or dividend policy and in order to finance the cash portion of the purchase price while maintaining a loan-to-value ratio below 55 percent, Castellum carried out a fully underwritten rights issue of shares in the amount of SEK 6,314 million.

Carnegie acted as lead financial advisor in connection with the SEK 26 billion acquisition of Norrporten and Joint Global Coordinator in connection with the SEK 6.3 billion rights issue.