Preliminary agreement for the sale of Norgani Hotels

Oslo, 24 August 2010
 
Oslo  Properties AS, a 100% owned subsidiary of Norwegian Property ASA ("NPRO"),
has  on 23 August 2010 entered into a preliminary agreement with Pandox AB and a
joint  venture of Eiendomsspar AS and  Sundt AS (jointly, the "Purchasers") with
the  objective of executing  a sale of  100% of the shares  in Norgani Hotels AS
("Norgani")  to the Purchasers. Norgani comprises the hotel real estate business
of  NPRO. The agreed  purchase price for  the investment properties  is NOK 8.3
billion,  which compares to a book value  as of 30 June 2010 of NOK 8.9 billion.
Closing  of the transaction is  expected to take place  in the fourth quarter of
2010, subject  to  the  parties  agreeing  a  full board approved share purchase
agreement,  completion of debt  financing and approvals  of relevant competition
law authorities.
 
The  Purchasers have already concluded their  due diligence of the business, and
will  in relation to the debt financing build  on the work that has been carried
out  by NPRO with its lending banks  in conjunction with the separation process.
The purchase price for the shares in Norgani is payable in cash, however as part
of the transaction, NPRO has agreed to provide vendor financing of approximately
NOK  0.6 million to the Purchasers, subject  to certain adjustments dependent on
the final debt financing established by the Purchasers.
 
Olav Line, CEO of NPRO comments: "A sale of our hotel real estate business is an
important  step in creating  a more focused  company with a stronger operational
and  financial platform  for profitable  growth. We  are very satisfied with the
price  and the commercial terms  of the transaction, especially  in light of the
current  capital market  environment. A  sale now  of Norgani  is definitely the
right  move  for  Norwegian  Property,  allowing  us  to swiftly and proactively
re-align  our balance sheet relative  to the possibilities we  see in the office
real estate business."
 
Description of Norgani
Norgani  is  the  leading  Nordic  hotel  property  owner. The business comprise
ownership  of 73 hotels  and one  conference center,  with 41 of  the properties
located in Sweden, 14 in Norway, 16 in Finland and 3 in Denmark. The hotels have
a  total of 12,884 rooms and a  lettable area of approx. 671,000 sqm. Individual
hotels  include large inner city conference  hotels, airport and highway hotels,
and resort & spa hotels.
 
Norgani  currently has 19 employees with Anders Vatne as CEO, and has offices in
Norway, Sweden and Finland. Norgani's board of directors consists of individuals
from  management of  NPRO. The  company has  been owned  by NPRO since September
2007.
 
With  the purchase of Norgani, Pandox will  become a leading European hotel real
estate  owner. The  hotel portfolio  will comprise  ownership in 119 hotels with
approx  24.000 rooms  in  Sweden,  Finland,  Norway,  Denmark, Germany, Belgium,
Switzerland,  Bahamas and  Canada. Pandox  is owned  by the  Norwegian companies
Eiendomsspar AS and Sundt AS.
 
Implications of the transaction for NPRO
The management of NPRO intends post completion of the sale to focus on realizing
value potential in the office real estate portfolio. Focus remains on creating a
fully  integrated  office  real  estate  company  with strong focus on the value
drivers   Letting,   Property  Management,  Development,  and  Transactions  and
Financing. The proceeds from the sale will reduce the financial risk in NPRO and
give the company possibilities to create additional value through investments in
existing  office portfolio. Post completion, including  the vendor note, the LTV
will be reduced to 64.1% from 74.0%.
 
NPRO  will have a  cash release of  approximately NOK 1.6 billion,  of which NOK
1,0 billion  will be immediate and before  full repayment of the NOK 0.7 billion
OPAS  acquisition facility.  Approximately NOK 0.6 billion will remain as seller
credit  for a  period of  up to  5 years. NPRO  will book  an accounting loss of
approximately NOK 0.8 billion including tax effects and currency effects as well
as transaction costs in accordance with the sale.
 
ABG  Sundal Collier and Thommessen are acting as advisors for NPRO in connection
with the transaction.
 
Arctic  Securities  are  acting  as  financial  advisor  for  the  Purchasers in
connection with the transaction.
 
The  parties will host  a presentation today,  24 August 2010, at 09:00 at Grand
Hotel, Oslo.
 
For further information, please contact:
Norwegian Property ASA
CEO Olav Line +47 48 25 41 49 or
CFO Svein Hov Skjelle +47 93 05 55 66
 
Eiendomsspar AS
CEO Christian Ringnes +47 90 59 91 21
 
[HUG#1439736]
 
Presentation Norwegian Property: 
http://hugin.info/136749/R/1439736/384096.pdf
 
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Source: Norwegian Property ASA via Thomson Reuters ONE