Ivar Tollefsen, the Norwegian billionaire with controlling stakes across much of the Nordic real estate industry, has bought back a portfolio of Icelandic properties to improve the leverage optics in one of his key holdings.
(Bloomberg) — Ivar Tollefsen, the Norwegian billionaire with controlling stakes across much of the Nordic real estate industry, has bought back a portfolio of Icelandic properties to improve the leverage optics in one of his key holdings.
Holding company Fredensborg AS, which is owned by Tollefsen, announced Friday that it was buying the largest residential real estate company in Iceland with a book value of about 6 billion Swedish kronor ($546 million), according to a statement.
The seller of the portfolio of 1,625 homes is Heimstaden AB, a property investment firm in which Tollefsen has 96% of the votes and 70% of the share capital. Heimstaden acquired the portfolio from Fredensborg in 2021.
The purchase price paid upon closing of the transaction amounts to 18.7 billion Icelandic kronur ($136 million), and the deal includes a deferred purchase price of as much as 12.1 billion kronur.
The deal leaves Heimstaden with just one core asset: its shares in struggling Swedish landlord Heimstaden Bostad AB — in which Tollefsen’s Heimstaden and pension fund Alecta are the joint largest shareholders with a 38% stake each.
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The sale “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,” Heimstaden Chief Executive Officer Helge Krogsbol said.
Swedbank AB analyst Axel Andersson noted that while the deal benefits holders of shorter-dated notes, “more actions need to be taken” for longer-dated maturities. Heimstaden’s euro bonds due 2027 fell 3.1 cents on the euro to 48 cents on Friday, according to data compiled by Bloomberg.
Heimstaden’s junk bond rating is currently under pressure at Fitch Ratings, which last month cut the rating one step to BB and placed its outlook on rating watch negative. The ratings firm flagged that Heimstaden would likely get reduced dividends from Heimstaden Bostad given pressure on the subsidiary’s credit metrics.
“Although we would have preferred to see a divestment to a non-related party and that all disposal proceeds would be paid instantly, we acknowledge that the transaction takes care of Heimstaden AB’s short-term liquidity needs,” Marcus Gustavsson, senior credit analyst at Danske Bank A/S, said in a note to clients.
(Updates with analyst comment, bond move from seventh paragraph.)
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