Nordea has completed its real estate divestment process by the sale of central business district properties in Finland, Norway and Sweden. A gain of approximately € 300m will be reflected in the second quarter accounts 2004.
The properties and real estate shares divested during the last 12 months represent an aggregate book value of approx. € 1.6 billion. The net financial effect of the total real estate disposals is a gain of approx. € 185 million. Following the completion, Nordea owns no major properties. Going forward, the financial effect of the total divestments will be positive.
Nordea has previously been one of the largest real estate owners in the Nordic region. In accordance with the strategy to focus on core business and increase capital efficiency the Group has reduced its real estate exposure. This has resulted in the divestment of Nordea’s residential property and owner-occupied properties in Denmark, the sale of the shares in Nordisk Renting, Citycon and Sponda, as well as the agreement in December last year whereby Nordea sold 97 properties in Finland, Norway and Sweden comprising primarily larger regional offices and traditional branch offices. Furthermore, a number of single office-buildings in Finland was divested in the beginning of 2004.
Nordea’s real estate divestment process is now completed by the sale of central business district properties in Finland, Norway and Sweden totalling some 190,000 m². The transaction includes lease agreements with durations of 25 years. A gain of approx. € 300 million will result from the transaction, and will be reflected in the second quarter accounts. When taking into account the write-down of € 115 million on certain properties in the year-end accounts 2003, the net financial effect of Nordea’s total real estate disposals amounts to approx. € 185 million, which is in line with previous expectations and communication to the market.
The properties divested during the last 12 months represent an aggregate book value of approx. € 1.6 billion. Following the completion of the divestment process, Nordea owns no major properties.
The recurring financial effect of the total divestments will be positive. The reduced financing requirement and the net gain will positively influence net interest income. This effect will more than outweigh the shortfall of rental income, while annual expenses related to properties leased back going forward are expected to be unchanged compared to Nordea’s annual real estate expenses prior to the divestment process, including depreciation. In addition, the divestments represent a reduction of total risk-weighted assets, which, in combination with the net gain, will improve Nordea’s capital position. Reduced real estate exposure will also decrease the use of economic capital. These effects have materialised gradually over the last year, and will have full effect from now onwards.
Citigroup, Catella Corporate Finance and Nordea Markets have acted as financial advisors to Nordea in its real estate divestment process.