Swedish group signs landmark asset sale

News

Rachel Frampton

02 December 1999

An international consortium has bought 370 properties from Swedish telecoms company Telia, in one of the largest real estate transactions ever in Sweden.

The SKr 5.1bn cash deal is the first significant example of the anticipated trend of European corporates selling their property assets.

Bankers Trust and Deutsche Bank’s principal finance group each have 28% in the consortium, while Swedish insurer SPP has 25% and US real estate asset manager Crown NorthCorp, which put the consortium together, owns the remaining share with a partner.

The 370 properties total 1.2m m2 and are let on arm’s length leases to Telia and other tenants. The portfolio produces a gross annual income of SKr 790m, reflecting a running yield of more than 8%. The properties include 125 flagship buildings, which account for 86% of the rental income: offices represent 54% of the income, industrial 16% and telecom buildings 16%.

The company’s headquarters on the outskirts of Stockholm are not included in the portfolio.

A new company, Telereit, has been set up to own and manage the properties, that will staffed by 180 former Telia employees. The company is likely to look for a listing on the Swedish stock exchange within 24 to 30 months, said Crown NorthCorp managing director Jack Koczela. Before the flotation, Telereit will look to sell off the bulk of the smaller properties that account for less than 20% of the income. “Once we have sold the non-core assets, what we will have is a very, very fine office portfolio throughout Sweden,” added Koczela.

A joint venture between Crown NorthCorp and Swedish property consultancy Catella, called Catella/Crown NorthCorp will act as asset manager to Telereit.

Telia announced plans at the end of last year to sell its property in order to invest in the expansion of its core business, and appointed Carnegie to act for it. Other bidders for the Telia portfolio are believed to have included Morgan Stanley and GE Capital, both of whom already have substantial interests in Sweden.

George Kountouris, a managing director of Bankers Trust, said the Telia transaction would prove to be “one of the prime examples of the international trend towards corporate property portfolio dispositions, leading to the emergence of new property companies”.

Telia is the first European corporate to achieve such a divestment; Telefonica in Spain has said it will float off its property assets, while ICL in the UK is considering a similar move.

“Telia is in the telecom market and not in the real estate sector,” commented Stig-Arne Larsson, first vice-president of the company.

Catella Fastighets Ekonomi, SVEFA and “hman Structured Finance advised on the transaction, which is conditional on approval of the European Union. The deal is expected to close by the end of this month.

An international consortium has bought 370 properties from Swedish telecoms company Telia, in one of the largest real estate transactions ever in Sweden. The SKr 5.1bn cash deal is the first significant example of the anticipated trend of European corporates selling their property assets. Bankers Trust and Deutsche Bank’s principal finance group each have 28% in the consortium, while Swedish insurer SPP has 25% and US real estate asset manager Crown NorthCorp, which put the consortium together, owns the remaining share with a partner. The 370 properties total 1.2m m2 and are let on arm’s length leases to Telia and other tenants. The portfolio produces a gross annual income of SKr 790m, reflecting a running yield of more than 8%. The properties include 125 flagship buildings, which account for 86% of the rental income: offices represent 54% of the income, industrial 16% and telecom buildings 16%. The company’s headquarters on the outskirts of Stockholm are not included in the portfolio. A new company, Telereit, has been set up to own and manage the properties, that will staffed by 180 former Telia employees. The company is likely to look for a listing on the Swedish stock exchange within 24 to 30 months, said Crown NorthCorp managing director Jack Koczela. Before the flotation, Telereit will look to sell off the bulk of the smaller properties that account for less than 20% of the income. “Once we have sold the non-core assets, what we will have is a very, very fine office portfolio throughout Sweden,” added Koczela. A joint venture between Crown NorthCorp and Swedish property consultancy Catella, called Catella/Crown NorthCorp will act as asset manager to Telereit. Telia announced plans at the end of last year to sell its property in order to invest in the expansion of its core business, and appointed Carnegie to act for it. Other bidders for the Telia portfolio are believed to have included Morgan Stanley and GE Capital, both of whom already have substantial interests in Sweden. George Kountouris, a managing director of Bankers Trust, said the Telia transaction would prove to be “one of the prime examples of the international trend towards corporate property portfolio dispositions, leading to the emergence of new property companies”. Telia is the first European corporate to achieve such a divestment; Telefonica in Spain has said it will float off its property assets, while ICL in the UK is considering a similar move. “Telia is in the telecom market and not in the real estate sector,” commented Stig-Arne Larsson, first vice-president of the company. Catella Fastighets Ekonomi, SVEFA and “hman Structured Finance advised on the transaction, which is conditional on approval of the European Union. The deal is expected to close by the end of this month.