European residential real estate manager Heimstaden AB has agreed to sell 100% of the shares in the Icelandic residential real estate company Heimstaden ehf. to Fredensborg AS.
The transaction will close in October 2023.
Heimstaden ehf. is the largest residential real estate company in Iceland with appr. 1,625 homes and ongoing projects of 41 units, located primarily in Reykjavik and its surrounding areas.
As of June 30, 2023, its property book value stands at approximately SEK 6.0 billion (ISK 75.4 billion).
In 2021, Heimstaden AB acquired Heimstaden ehf. from Fredensborg AS, achieving an annualised return on investment of appr. 18% post-acquisition, corresponding to an accounting profit of SEK 0,6 billion for the parent company upon realisation (consolidated accounting loss of SEK 0.4 billion).
The purchase price paid upon closing of the transaction amounts to ISK 18.7 billion (appr. SEK 1.5 billion). A further deferred purchase price in the range ISK 10.9 -12.1 billion (appr. SEK 0.87-0.97 billion) will be paid when Fredensborg AS has completed the exit strategy of Heimstaden ehf., as initiated by Heimstaden AB.
In addition, the purchase price mechanism includes a performance based earn out element based on the total consideration received by Fredensborg AS at an exit from Heimstaden ehf. If the exit strategy isn’t completed within 36 months after closing and the deferred purchase price remains unsettled, Heimstaden AB can, under specific conditions, request a transaction reversal.
The divestment follows the communicated strategy to continue the deleveraging of Heimstaden AB and the proceeds will be used for liability management purposes.
CEO Helge Krogsbøl comments: “The sale of Heimstaden’s Icelandic portfolio offers an attractive opportunity to accelerate our exit from the Icelandic market, advance our deleveraging, and capture a significant portion of the ongoing exit strategy’s upside.”
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