Norwegian sells Norgani hotels in EUR 1bn deal

Norwegian Property has concluded an unconditional agreement to sell the Nordic hotel group Norgani for about NOK 8.3 bn (EUR 1 bn). The buyer is Sech Holding, a company jointly owned and controlled by Swedish hotel company Pandox and Heches Holding, which is controlled by Eiendomsspar and the Sundt family.

Oslo-listed Norwegian Property, acting through its subsidiary Oslo Properties, is providing NOK 600 mln (EUR 74 mln) vendor financing to the buyer. Of this sum, NOK 200 mln will mature after two years and the remaining NOK 400 mln after five years. The vendor financing is secured by first priority pledge in the Norgani Hotel's shares and guarantees from Pandox and Heches Holding. Both tranches have a fixed interest rate of 5% per annum.

Norwegian Property has an option until end-December 2010 to purchase back a minority share of up to 9.9% of the share capital of Norgani Hotels at the buyer's cost price.

The parties announced they had entered a preliminary agreement on the sale of Norgani in August. Completion of the transaction was contingent upon the parties agreeing a full board approved sales and purchase agreement, completion of debt financing and approvals by relevant competition authorities. These conditions have now been met.

Pandox has said it will be the leading specialised hotel real estate specialist in Europe in terms of geographical diversity, number of hotels and brands on the completion of the deal. Its EUR 2.3 bn hotel property portfolio will include 119 hotel properties with 24,000 rooms, nine operational businesses and one conference centre (Helsinki). The portfolio will encompass a total of 15 brands.

Norgani has 73 hotels that are leased to hotel operators like Scandic and Choice Hotels in Norway, Sweden, Finland and Denmark.