Swedish property investor Heimstaden has announced the sale of Icelandic residential real estate company Heimstaden ehf. to peer Fredensborg as part of ongoing efforts to deleverage the business.
Heimstaden ehf. is the largest residential real estate company in Iceland with around 1,625 homes and ongoing projects with 41 units, located primarily in Reykjavik and its surrounding areas.
The company’s property book value stands at around SEK 6.0 bn (€0.5 bn) as of June 30, 2023.
The parties have agreed a purchase price of around SEK 1.5 bn, with a further SEK 0.87-0.97 bn to be paid once Fredensborg has completed Heimstaden ehf.’s exit strategy, as initiated by Heimstaden AB. In addition, the purchase price mechanism includes a performance-based earn-out element.
Heimstaden said the proceeds will be used for liability management purposes.
Heimstaden’s CEO Helge Krogsbøl commented: ‘The sale of the 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.’
Heimstaden AB acquired Heimstaden ehf. from Fredensborg AS in 2021, achieving an annualised return on investment of around 18% post-acquisition, corresponding to an accounting profit of SEK 0.6 bn for the parent company.
