Pandox JV to acquire Norgani Hotels for EUR 1bn

Oslo Properties, a 100% owned subsidiary of Norwegian Property (NPRO), has entered into a preliminary agreement to sell Norgani Hotels for NOK 8.3 bn (just over EUR 1 bn).

The buyers are Swedish hotel property firm Pandox and a joint venture of two Norwegian firms, Eiendomsspar and Sundt.

Pandox 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.

Oslo Properties said on Tuesday that the agreed purchase price compared to a book value at end-June 2010 of NOK 8.9 bn. Closing of the transaction is expected to take place in the fourth quarter of 2010, subject to the parties agreeing a full board approved share purchase agreement, completion of debt financing and approvals of the relevant authorities.

The purchase price for the shares in Norgani is payable in cash, however as part of the transaction, NPRO has agreed to provide vendor financing of approximately NOK 600 mln to the purchasers, subject to certain adjustments dependent on the final debt financing established by the purchasers.

An earlier attempt by Oslo Properties to sell Norgani for NOK 11.2 bn (then about EUR 1.4 bn) stalled in June 2008 when an unnamed group of prospective buyers failed to make a definite bid. Oslo Properties had acquired Norgani in late 2007 after beating Aberdeen Asset Management's offer for the hotel group. Oslo paid NOK 3.75 bn and took on NOK 6.3 bn in debt to acquire the hotel chain.