Gazit-Globe buys Norwegian co for €1.5b

Gazit-Globe managers

The acquisition of Sektor Gruppen will make Gazit-Globe's Citycon subsidiary the third largest public real estate company in Europe.

Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT), controlled by chairman Chaim Katzman, today announced that it would acquire all the shares in Norwegian company Sektor Gruppen for €1.47 billion, based on the value of its assets. The deal will take place through Citycon, Gazit-Globe's Finnish subsidiary.

According to the figures, the net asset value (NAV) of Sektor Gruppen , representing the effective value of the company for the deal, is €583 million, the amount that will be paid by Citycon to the current shareholders through a €600 million issue of rights into the Finnish company by the current shareholders.

The largest shareholders in Citycon are Gazit-Globe (42.8%) and Canadian fund CPPIB (15%), which have undertaken to inject capital according to the proportion of their holdings in Citycon. Gazit-Globe's share of the capital injection will be €257 million. Together with the capital injection, Citycon has reached understandings with Sektor Gruppen's lending banks for a €250 million bridging loan to cover the balance of the debt, which will include, among other things, two bond series on the Oslo stock exchange.

Sektor Gruppen is a Norwegian private real company that owns, develops, and manages shopping centers with supermarket anchors. The main properties of the company, the second largest in Norway in its area, are located in Oslo, Stavanger, and Bergen. As of now, Sektor Gruppen owns 20 commercial centers, 17 of which it owns completely, with an aggregate area of 390,000 sq.m. and a 97% occupancy rate. The company also manages 200,000 sq.m. of other commercial properties. The company's properties generate €127 million, reflecting a 5.4% net operating income (NOI) ratio in 2014. The company's current owners are Swedish real estate fund NIAM; Sektor Gruppen chairman Peter Stordalen, who owns the largest hotel network in Scandinavia and a leading real estate firm in Norway; and the Johannson and Varner families, who own the largest retail and clothing chains in Norway , respectively.

The acquisition will make Citycon, managed by CEO Marcel Kokkeel, the largest Nordic public company in in its field, and the third largest in Europe. The company which has a €1.63 billion market cap on the Finnish stock exchange, own 59 commercial properties with supermarket anchors in Finland, Sweden, Denmark, Estonia, and Lithuania with an aggregate area of 930,000 sq.m. The average occupancy rate for its properties, which generate an average of €25.80 per sq.m. per month, is 96%, and its annual rent return amounts to 6.3% of the value of its properties. As of the end of the first quarter of 2015, the company's properties were worth €2.8 billion with a 40.8% LTV ratio, making the net value of its properties €1.65 billion.

The deal is slated for final signing this July, following which the value of Citycon's properties will jump 35% to €4.3 billion, with a net asset value of €2.2 billion. Citycon's portfolio of properties in Norway will account for 32% of its total asset value of 27% and of its NOI, while the proportions of Finland and Sweden will drop from 51% and 39% to 35% and 26%, respectively. The acquisition will also make Europe's share in the annual NOI (including Atrium) of Gazit Globe, Citycon's parent company, 48%, greater than the 46% accounted for by the Western hemisphere (US, Canada, and Brazil). The proportion accounted for by Israel will shrink to 6%.

"This deal once again proves that the Gazit-Globe group is a significant player in the global commercial group market, and also proves its abilities to enter new and attractive territories with high entry barriers, while we're enhancing the value of our asset portfolio and the cash flow resulting from it," said Chaim Katzman, following the deal, which will make Norway's share of Gazit-Globe's properties 7%.

Published by Globes [online], Israel business news - www.globes-online.com - on May 25, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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