Norwegian Property snaps up Oslo Telegrafen amid spiralling debt repayments

The Norwegian Property Group has reached an agreement to acquire the Oslo Telegrafen, an office property in the Norwegian capital located in the city's former telegraph headquarters, at a discount of nearly 30% on its sale price three years ago.

The deal comes after news emerged of an alleged repayment crisis for the owners of the property, a syndicate structured by Arctic Securities, known as Telegrafen Invest.

The newly refurbished building was acquired by the syndicate in December 2020 for NOK 2.25 bn (€210 mln) from EPISO 4, an opportunity fund advised by Tristan Capital Partners.

The deal was closed following an extensive renovation of the 25,500 m2 building, which is situated in the Kvadraturen district of the Norwegian capital.

Tristan reported that the deal marked one of the largest single real estate transactions in Norway at the time.

However, repayments on the purchase - which was backed with a bond worth NOK 1.6 bn - have been reportedly spiralling in the ongoing high interest rate environment.

Accordingly, NPRO has inked a deal to purchase 94.1% of the asset at a considerable discount. The new purchase price is equivalent to NOK 100 mln (€9 mln) for 100% of the shares in the entity owning the asset, plus repayment of the loans on the company's existing debt. This corresponds to a fall in value of around 28%.

The existing financing is due to expire on 15 December 2023.

Over the coming weeks, the board of directors of Norwegian Property will look into issuing new shares in Telegrafen Invest in connection with the long-term financing of the acquisition.

The building has several solid tenants with long leases, Norwegian Property reported, of which the Nordic Office of Architecture / Norconsult is the largest. Annual rental income as of 30 September is NOK 90 mln.

Norwegian Property CEO, Bent Oustad, said: 'It is with great enthusiasm that we have reached agreement with approximately 95% of the owners of Telegrafen Invest to purchase their shares in the property Telegrafen in Kongens gate 21.

'We are constantly looking for quality buildings, with good tenants at a reasonable price who can help further develop our portfolio in CBD. The Telegrafen in today's form fits perfectly into our portfolio.

'The property is environmentally classified Breeam-in-use Excellent, centrally located and close to public transportation which fulfills several important requirements in NPRO’s sustainability strategy.'

Board member Kathrine Astrup Fredriksen added: 'The acquisition is in line with the company's growth strategy, and we have also been opportunistic and able to exploit market events.

'The building was constructed 100 years ago and was completely renovated in 2020. We will contribute to long-term value creation in the years to come, and look forward to the next 100 years. With this acquisition, we have expanded our exposure in Oslo CBD, where we already own a significant property portfolio.'

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