The sale is an element in the new strategic direction for DrottÃ¢â¬â¢s commercial real estate operations, where the focus is on properties in Stockholm. The portfolio comprises 45 properties Ã¢â¬" six of which are leaseholds Ã¢â¬" with 201,000 square meters of rentable space (including 8,000 sq. m. of residential space). The occupancy rate is 94 percent.
Current leases generate annual rent of SEK 222 million and an operating surplus of SEK 143 million. The sale is being executed through a special purpose company, with the closing scheduled for December 30, 2003. The buyer is Kungsleden AB.
Effects for Drott
The sales price amounts to SEK 2,223 million. An independent appraisal of the market value of DrottÃ¢â¬â¢s property portfolio was made as per December 31, 2002. The market value of the properties now being sold was appraised at the time at SEK 2,230 million.
For accounting purposes, the sale results in a gain of approximately SEK 280 million, which will be reported in the fourth quarter 2003. The fiscal residual value in the portfolio is approximately SEK 770 million less than the sales price. The effect on liquidity based on the difference is estimated at SEK 50 million. Outstanding tax loss carryforwards are reduced by approximately SEK 40 million.
The sales proceeds will be received upon closing, with the exception of SEK 350 million, which will be received in 2004. The sale initially reduces the GroupÃ¢â¬â¢s annual cash flow by approximately SEK 70 million. The sale requires negotiations pursuant to the provisions of the Co-determination in the Workplace Act, which will begin immediately.
Catella Corporate Finance has served as DrottÃ¢â¬â¢s adviser in the sales process.
Following the sale, DrottÃ¢â¬â¢s property portfolio in the Ãâresund region is concentrated on residential properties. In MalmÃÂ¶, Drott owns a total of 44 properties with 2,606 apartments, and in Lund it owns nine properties with 537 apartments.
Source: Drott AB