The largest hotel property company in the Nordic region - Norgani - is acquiring the hotel property company Hotelleiendom AS. Norgani has acquired all the shares in the company through cash payment. The agreed price for the equity is SEK 325 million ($40 million), giving a total enterprise value of SEK 1.775 billion ($223 mn).
Implied price per room is approximately SEK 558,000, while the price per square meter is approximately SEK 14,100.
Hotelleiendom AS comprises 16 hotels with 2,910 rooms, centrally located by the main roads into larger cities. All hotels are operated by Scandic/Hilton and Norgani will, after the transaction, in total own 25% of their hotels in the Nordic region.
After completion of the transaction Norgani will own a total of 64 hotels with 10,515 rooms, acquired at a purchase price of NOK 6.5 billion.
The 2006 gross rent level for Norgani is estimated at approximately NOK 510 million. The Hotelleiendom Group holds tax losses carried forward in Sweden of approximately SEK 1.1 billion.
The Norgani Group will, after this transaction, have total tax losses carried forward of approximately SEK 2.2 billion.
“The acquisition will be the largest made by Norgani to date, and it will strengthen Norgani’s position in the Swedish market considerably. Furthermore it will strengthen already good relations with Hilton/ Scandic Hotels. The recently performed due diligence has further confirmed that the hotels are in very good shape and condition and will be a perfect match to Norgani’s existing portfolio”, says Norgani CEO Kjell Sagstad.
About Norgani including the Hotelleiendom-transaction Norgani is the owner of a portfolio of 64 larger three or four star hotel properties, centrally located with an average size of 164 rooms.
The weighted average lease duration for the total portfolio is approximately 10 years.
Tenants include hotel operators such as Scandic / Hilton which leases 45% of the hotels, Choice Hotels Scandinavia (34%), Radisson SAS (8%) and other Nordic and international chains.
In addition to the long lease duration, Norgani has minimum lease guarantees from sellers for the next 5 years.
The hotels are located in Norway, Sweden, Denmark and Finland. In November 2005 Norgani Hotels was listed on Oslo B¿rs under the ticker NORGAN. The company has more than 300 shareholders and a current market capitalisation of around NOK 1.7bn. The company headquarter is located in Oslo.
Hotelleiendom was established mid 2005 with more than 50 shareholders. The company owns a portfolio of 16 Swedish hotel properties with 2,910 rooms - an average of 182 rooms - and approximately 115,000 square meters.
All the hotels are rented to Scandic Hotels, a wholly owned company by the London based Hilton Group plc. Hotelleiendom’s current net rental income is SEK 104 million, which will be 100% CPI-adjusted annually.
The net rent is for 10 years guaranteed by Capona, which is a listed Swedish property company. Hotelleiendom carries 82% leverage with an average net interest bearing debt of SEK 1,450 million and an average interest rate on debt of approximately 4.1%.