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2019-12-23

Mälardalen Omsorgsfastigheter: Mälardalens Omsorgsfastigheter have entered into an agreement for the acquisition of a port...

Mälardalens Omsorgsfastigheter Holding AB (publ) ("MOFAST" or the
"Company") have entered into an agreement with a subsidiary to
Samhällsbyggnadsbolaget i Norden AB ("SBB") to acquire 100 percent of
the shares in an indirectly property owning company (the
"Transaction"), comprising of a portfolio of 43 public use
properties, mainly within the LSS and HVB segments, located foremost
in the mid- and southern part of Sweden. The Transaction is based on
an underlying property value of SEK 842 million, after deduction of
deferred tax of SEK 27 million. The transaction costs and working
capital adds up to SEK 33 million. The total capital requirement to
SEK 875 million will be financed through a credit facility of SEK 490
million and a directed share issue of at least SEK 350 million and up
to SEK 385 million (the "Directed Share Issue"). SBB will subscribe
for new shares for an amount of SEK 33 million in the Directed Share
Issue. If the Directed Share Issue is not fully subscribed, SBB will
provide a shareholder loan for the remaining amount of up to SEK 35
million. As a result of the Transaction, the Board of Directors in
MOFAST has resolved to summon an Extraordinary General Meeting to
approve an issue authorisation for the Board of Directors. The
Directed Share Issue is conditional upon, inter alia, approval of the
issue authorisation by the Extraordinary General Meeting in MOFAST
for the resolution of the Directed Share Issue. The Directed Share
Issue has support among the main shareholders in MOFAST.

The Transaction in brief

· The acquisition is in line with MOFAST's strategy and represents
an opportunity to grow MOFAST into a larger, attractive portfolio
with potential for institutional and international interest.

· The acquisition provides potential synergies for MOFAST to
decrease actual cost for central administration (SEK/sq.m.) for the
aggregated portfolio. The acquisition contributes to achieve a more
diversified risk in terms of the individual locations of properties
through scale. The Transaction also offers the possibility to explore
new markets.

· The Transaction is based on an underlying property value of SEK
842 million, after deduction of deferred tax of SEK 27 million.

· Newsec has provided an external valuation that supports the
underlying property value.

· The total consideration (together with transaction related costs
and working capital) is intended to be financed through a new credit
facility totalling SEK 490 million and the Directed Share Issue of
new shares in MOFAST generating gross proceeds of up to approximately
SEK 385 million.

· Main shareholders in MOFAST have pre-committed to subscribe for a
combined SEK 87 million, and SBB has pre-committed to subscribe for
SEK 33 million (SEK 120 million in total) in the Directed Share
Issue.

· If the Directed Share Issue is not fully subscribed, the residual
of the equity financing will be covered through a shareholder loan
from SBB, of up to SEK 35 million.

· The Directed Share Issue is conditional upon approval of issue
authorisation for the Board of Directors by MOFAST's Extraordinary
General Meeting for which a separate press release with the notice
will be published today, and that the Board of Directors resolves on
the Directed Share Issue by virtue of such authorisation.

· MOFAST and the target company (the "Group") combined will have a
property value of approx. SEK 1,4 billion, and an estimated rental
income of SEK 98 million and a net initial yield of 5,3%.

· Closing of the Transaction is planned to take place in March 2020.
"The acquisition represents a unique opportunity to acquire a
portfolio generating a long term strong cash flow for MOFAST. The
acquisition also achieves a well diversified add on to the existing
properties and gives the company the possibility to increase NOI
through active property management which offers attractive returns
for the investors" says Mattias Bülow, CEO of MOFAST.

Background and reasons

MOFAST is a Swedish real estate company that owns and manages a
portfolio encompassing 25 public use properties in the greater
Stockholm region.

MOFAST acquired the current property portfolio in June 2019 based on
an agreed property value of SEK 550 million and was financed through
a share issue of SEK 200 million and a debt facility of SEK 355
million. The portfolio was acquired to a net yield of 5.1% and
initial LTV was 65%.

MOFAST is a publicly listed company traded at Spotlight Stock Market.
The Company has a market capitalization of approximately SEK 212
million. Average daily turnover, measured over the last 2 months, has
been approximately SEK 525,000.

The real estate portfolio consists of 25 public care homes; care home
for disabled people, pre-schools and health centers located in the
greater Stockholm area and Mälardalen. The tenants are either public
or financed by the public, resulting in a relatively secure cash
flow. The portfolio encompasses a total gross lettable area of
approximately 16,700 sq.m. with a total gross rental income of
approximately SEK 32 million. The portfolio has a weighted average
unexpired lease term of approximately 7 years.

The Company have entered into an agreement with a subsidiary to SBB to
acquire 100 percent of the shares in a target company, owning a
portfolio of 43 public use properties in Sweden. The Transaction is
based on an underlying property value of SEK 842 million, after
deduction of deferred tax of SEK 27 million. As a result of the
Transaction, the Board of Directors in MOFAST has resolved to summon
an Extraordinary General Meeting to approve an issue authorisation
for the Board of Directors to resolve the Directed Share Issue, which
will be issued as part of the financing for the Transaction. The
Directed Share Issue is conditional upon, inter alia, issue
authorisation granted by the Extraordinary General Meeting in MOFAST
and that the Board of Directors resolves on the Directed Share Issue.
The Extraordinary General Meeting will be held on 24 January 2020.

The target company consists of 43 properties, mainly within the LSS
(care homes for disabled) and HVB (care homes for youth and families)
segments, located foremost in the mid- and southern part of Sweden.
The tenants are primarily public or financed by the public, resulting
in a relatively secure cash flow. The underlying property value for
the Transaction is SEK 869 million. The rental income is estimated to
SEK 65 million and the NOI is estimated to SEK 47 million in 2020,
which corresponds to a net yield of 5,4%. The target portfolio
comprises a total of 59,000 sqm lettable area and a total land area
of 365,500 sqm.

The acquisition represents an opportunity to grow MOFAST into a
larger, attractive portfolio with potential for institutional and
international interest.

The closing of the Transaction is planned to take place in March 2020.

MOFAST property portfolio after the acquisition

After the acquisition, MOFAST will own 68 properties with a property
value of around SEK 1.4 billion and with a rental income of around
SEK 98 million.

Preliminary proforma earnings capacity after the Transaction

Amounts in SEK million MOFAST Sambo Proforma
Rental income 32.8 65.0 97.7
Property costs -4.1 -17.8 -21.9
Net operating income 28.7 47.2 75.8
Central administration -3.1 -4.6 -7.7
Profit before financial items 25.6 42.6 68.1
Net financials -9.5 -12.3 -21.8
Profit from property management 16.0 30.3 46.3

The proforma showing earnings capacity per annum, based on the current
property composition and rent roll / contract base. The earnings
capacity does not include an assessment of the future development of
rent, vacancy rates, real estate costs, interest rates, changes in
value, purchase or sale of properties or other factors.

The rental income is based on the current rent roll / contracted rent
for the two portfolios respectively as per December 2019, and is
adjusted according to a 2% CPI change to represent the 2020 level.

Property costs consist of an assessment of normalised operating costs,
maintenance expenses and property management.

Financial income and expenses have been calculated on the basis of the
company's actual average interest rate and credit portfolio, but have
not been adjusted for effects regarding accrual of loan costs.

The figures should be considered as theoretical estimates and are
presented for illustrative purposes only.

Preliminary proforma balance sheet

[][][]
Amounts in SEK MOFAST 30 Sep 2019 Financing Acquisition Proforma
million
ASSETS
Properties 559.5 - 871.0 1,430.5
Plot rights 7.2 - - 7.2
Non-current assets 566.7 - 871.0 1,437.7

Accounts 7.7 - - 7.7
receivables
Prepayments and 1.7 - - 1.7
accrued income
Other receivables 0.6 - - 0.6
Cash and cash 18.1 875.0 -871.0 22.1
equivalents
Current assets 28.1 875.0 -871.0 32.1

TOTAL ASSETS 594.8 875.0 - 1,469.8
EQUITY AND
LIABILITIES
Share capital 2.0 3.9[1] - 2.0
Other equity 198.0 381.1[1] - 583.0
Retained earnings / 10.1 - - 10.1
profit for the year
Equity 210.1 385.0 - 560.1

Deferred tax 6.1 - - 6.1
Long-term interest 354.7 490.0 - 844.7
-bearing debt
Leasing debt, plot 7.2 - - 7.2
rights
Non-current 368.0 490.0 - 858.0
liabilities

Accounts payable 0.6 - - ...

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