Heimstaden Bostad pays €9.1bn for residential portfolio

Heimstaden Bostad, the Malmö headquartered Swedish housing specialist, is to pay Germany’s Akelius SEK 92.5 billion (€9.1 billion) for a portfolio of 28,776 homes in Germany and Scandinavia.

The portfolio, which comprises 599 buildings, is located in Germany, Sweden, and Denmark. The assets, which produce an annual rent of SEK 2.8 billion, are located in Berlin (14,050 homes), Hamburg (3,592), Stockholm (5,934), Malmö (4,107), and Copenhagen (1,093).

The deal is expected to close in December although it is subject to merger clearance.

Heimstaden said it will maintain leverage in line with policy. The transaction will be financed with cash, SEK 24.8 billion in new equity and a SEK 65.7 billion bridge financing facility with a two-year maturity.

Equity has been committed by existing shareholders Heimstaden AB (SEK 8.5 billion); KPA Pension, which is part of Folksam Group (SEK 8 billion); Alecta (SEK 7.1 billion); and the Swedish Pensions Agency (SEK 1.25 billion).

Heimstaden said that the location and scale of the portfolio creates “synergy and operational scale effects unique to Heimstaden Bostad”.

Deal provides scale in both new and existing markets

Heimstaden CEO Patrik Hall said that scale leads to improvements throughout the company’s value chain.

“Over the last few years, Heimstaden Bostad has successfully integrated properties and organisations in new and existing markets, with large acquisitions in Denmark, the Netherlands, the Czech Republic, and Germany,” Hall said.

Christian Fladeland, co-chief investment officer at Heimstaden added: “We are growing our presence in markets where we have strong knowledge and experience and markets that share key attributes, such as supply/demand imbalance, favourable demographic trends, and growing economies. We are particularly pleased to grow and expand geographically in Germany, the largest and most mature residential market in Europe, and to establish a presence in Hamburg.”

Heimstaden Bostad was advised by Greenberg Traurig, DLA piper, Warth & Klein Grant Thornton, PwC, REELAB, COWI, Sweco, WSP in the transaction.

Deutsche Bank is acting as financial advisor to Heimstaden Bostad and Deutsche Bank and J.P. Morgan have underwritten the bridge financing facility.