Heimstaden AB (Heimstaden) has today agreed to divest all of its shares in Thors Have MidCo ApS, Naesbyvej MidCo ApS and Atriet ApS to Fredensborg 32 AS (Fredensborg) for a total gross purchase price of c. €113.8m and cash at closing of c. €45.7m on a cash and debt free basis. The transaction is expected to close in February 2025.
The Target Companies are, directly or indirectly, the holders of newly finalized or ongoing residential real estate projects in the Copenhagen region and in Odense, respectively, in total encompassing 591 units. The Target Companies had a book value of c. €105.8m as per 31 December 2024 and the fair gross market value of the Target Companies is estimated to €112.2m – €114.6m according to the fairness opinion obtained (see below).
The intention of Fredensborg is to divest the Target Companies (or properties included therein) within six years. When all Target Companies (or the underlying properties) have been divested within such time, Heimstaden has a right to receive an earn-out consideration. The earn-out consideration is time-limited and conditional upon Fredensborg having achieved an agreed internal rate of return (IRR) of 12% per annum. The earn-out consideration would amount to 30% of any excess return above the 12% IRR.
The transaction is conditional upon the successful issue of new senior unsecured notes and completion of the tender offer announced by Heimstaden on 10 January 2025 in relation to its c. €44.5m floating rate notes due April 2025, its c. €106.8m floating rate notes due October 2025 and its €350m fixed rate notes due March 2026, as well as the approval by the current external finance providers of the Target Companies and/or their subsidiaries, respectively. Subject to the satisfaction of all closing conditions, the transaction is expected to close in February 2025.
The divestment follows the communicated strategy to continue the deleveraging of Heimstaden and the proceeds will be used for liability management.
Christian Fladeland, Chief Investment Officer and Co-CEO, commented: "The sale of our equity stakes in these entities allows for accelerating our deleveraging, whilst maintaining a possibility to capture future upside as the projects stabilise through strategic transaction structuring."
Image source - Pexels.
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