Brookfield’s Super-Core Infrastructure Partners fund has sealed the largest social infrastructure transaction of the year in the Nordics with the acquisition of a 49% stake in SBB’s educational portfolio mostly located in Sweden and Norway. The deal is valued at for SEK 9.2 bn (€840 mln) in cash to be paid up front, plus up to SEK 1.2 bn in cash through earn-outs.
Under the deal, the assets were transferred to a newly formed social infrastructure company, EduCo AB, in which the previous owner Samhällsbyggnadsbolaget i Norden AB (SBB) is taking a 51% interest.
The company focuses on education assets in the Nordics and the portfolio encompasses 585 sites. The majority of the portfolio is located in Sweden and Norway and consists of preschools, elementary schools, upper-secondary schools and universities. The portfolio will be managed by SBB.
The assets generate a revenue and net operating income in 2023E of SEK 2.3 bn, and SEK 1.9 bn respectively. The portfolio benefits from long-term leases with minimum turnover: 13-year weighted average term.
The deal is likely to be completed in two stages -- a part closing when 77% of the asset value will be transferred to EduCo by the end of this year. The second step that entails transfer of remaining assets could be completed in the first or second quarter of 2023.
As part of the deal, EduCo will also enter into an asset management agreement with SBB to pay 1.8% of its net operating income per annum.
Proceeds from the transaction will mainly be used to deleverage SBB, bringing SBB’s loan-to-value ratio to 42.4% from 46.9% as of the third quarter of 2022.
Eduardo Salgado, a managing partner in Brookfield’s Infrastructure Group and head of Brookfield Super-Core Infrastructure Partners, said, 'This is a unique opportunity to invest in the leading social infrastructure educational portfolio in the Nordic region. This is a sought after and resilient asset class, underpinned by the essential nature of the underlying assets and its predictable, inflation-secured cash flows under very long contracts. This partnership is highly attractive for us given SBB’s extensive experience in working with municipalities and publicly funded operators in the Nordics within the educational sector.'
'There will be an increasing need for schools, preschools and university buildings in the Nordics, a market in which we already have a strong foothold. With Brookfield as our long-term partner we will also benefit from diversifying SBB Group’s funding sources, whilst we accelerate deleveraging of our Group balance sheet in line with our strategy,' commented Ilija Batljan, CEO and Founder of SBB.
JLL together with partners Akershus Eiendom and EDC International Poul Erik Bech acted as commercial advisor.
‘I am extremely proud of the work we have done as commercial advisors to Brookfield in this very large, complex transaction. Moreover, I think it is interesting to see a global giant like Brookfield identifying educational assets as a key component of social infrastructure and that they now choose to invest significant amounts in Swedish and Nordic educational infrastructure,’ said Thomas Persson, head of Capital Markets Nordics, JLL.
