SWEDEN - The Swedish government has agreed to sell the state-owned real-estate company Vasakronan to AP Fastigheter in a deal valued at SEK 41.1bn (€4.4bn).

AP Fastigheter, the jointly owned real estate arm of the first, second third and fourth Swedish National Pension Funds (AP1-4), will take control of the company from September 1 2008 at which point it will take on the Vasakronan brand name.

Vasakronan is one of Sweden's largest property companies, and currently has a real estate portfolio of 171 properties focused on office and retail properties in Stockholm, Göteborg, Malmö, Lund and Uppsala. 

Under the terms of the deal the government is selling its 100% stake in Civitas Holding AB, Vasakronan's parent company, although theNational Property Board and the government-owned corporation Specialfastigheter AB have acquired "certain properties of national interest" from Vasakronan ahead of the sale to ensure they remain in government control.

To fund the deal AP Fastigheter will assume net debt and other commitments of SEK 16.5bn from a number of Nordic banks, while shareholders will finance the remaining SEK 24.6bn.

Mats Odell, minister for local government and financial markets, said the deal was good value for both Vasakronan and Swedish households.

"AP Fastigheter is a solid long-term owner, which made an offer that after an overall assessment is the best and represents the higher price of the two final offers. This transaction also means that the AP Funds improve their investment profile, benefiting current and future pensioners," he added.

AP Fastigheter, established in 1998 to invest and manage real estate for AP1-4, focuses on investments in housing, offices and retail, and at the end of December 2007 it owned 175 properties with an estimated value of SEK 39.7bn.

Vasakronan's board of directors claimed the combined entity would create a high-quality property company with "significant development potential", as it will have a combined portfolio of more than SEK 80bn and an annual rental value of over SEK 6bn.

Lennart Nilsson, chairman of AP Fastigheter, said: "This was a unique opportunity to acquire a very attractive and well-run real estate company with professional staff and a stock which is in line with our location strategy. The combination of AP Fastigheter and Vasakronan is good for tenants, business, society - and for our owners, that is to say all of us whose pension capital is managed by the AP funds."

The deal forms part of the government's decision in March 2007 to reduce the amount of state-controlled companies in Sweden, and revealed it planned to reduce its stake in six companies, including Vasakronan, OMX - which was sold to Nasdaq in January - and Vin&Sprit AB (V&S) - sold to Pernod Ricard in March 2008. [See earlier IPE.com article: AP4 joins bid for Absolut vodka]

Lenner & Partners and MAQS Advokatbyrå provided AP Fastigheter with financial and legal advice, while the Swedish government received financial, legal and accounting advice from JP Morgan, Advokatfirman Cederquist and Öhrlings PricewaterhouseCoopers.

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