Norwegian Property to split up into office and hotel firms

Oslo-based Norwegian Property has initiated a process to split into two independent firms, one for office and the other to manage its hotel portfolio. The move follows the completion of a strategic review.

'Both the office and hotel operations are to be further developed into leading market players in their field,' the firm revealed during the presentation of its results for the fourth quarter of 2009. 'The goal is to create long-term value as fully integrated property companies, focusing on the value drivers letting, property management, development, transactions and financing.'

CEO Olav Line: 'In terms of market development, 2009 has been a challenging year, but for office properties the market seems to be about to turn, and an improvement is expected going forward. The hotel market lies slightly behind in the cycle, but the negative development is expected to turn towards the end of 2010.'

Norwegian Property achieved a profit before tax and fair value adjustments of NOK 72.9 mln (EUR 9 mln) in the fourth quarter of 2009. This is 25% up compared with the corresponding period in the preceding year. Operating profit before fair value adjustments came to NOK 342.2 mln, compared with NOK 389.2 mln in the same period in 2008.

Gross rental income amounted to NOK 430.1 mln, a decrease of 4.5% from fourth quarter of 2008 adjusted for sale of properties. Total value adjustments for the property portfolio came to -1.2% in the quarter, corresponding to NOK -283.2 mln. Commercial properties had a positive value adjustment of 0.2% whereas the hotel portfolio was adjusted downwards by 3.5%.

Profit before tax amounted to NOK -276.3 mln in the fourth quarter 2009, compared with NOK -2 508.2 mln in the corresponding period of 2008. During the fourth quarter, Norwegian Property has renegotiated a total of 40 office rental agreements, which resulted in an aggregate increase in rent levels of 18.8% for these contracts.

Norwegian Property's office portfolio is valued at NOK 15 bn (about EUR 1.9 bn) and its hotel portfolio is valued at EUR 1.1 bn).