The combined company will as a result of the Transaction form a leading Nordic logistics, warehouse and light industrial real estate company with strategic focus on long-term growth, financial stability and sustainability. The Transaction will also significantly expand and diversify the combined company’s operations, improve its growth prospects and access to capital and enhance its in-house capabilities. The Transaction values both companies based on reported net asset value (NAV) as of 31 March 2024 adjusted for certain minor subsequent events. The relative ownership between shareholders in Logistea and KMC Properties in the combined company, which will operate under the company name Logistea, will be approximately 51 per cent and 49 per cent respectively. The Transaction is, subject to certain conditions, expected to be completed on or about 11 July 2024.

Company highlights

The combined property portfolio will consist of a lettable area of around 1.4 million sqm, split across 145 properties in Sweden, Norway, Denmark, Finland, the Netherlands, Belgium, Germany and Poland, with the large majority of the assets located in Sweden and Norway.

The combined company will have a property value exceeding SEK 13 billion and generate net operating income of almost SEK 900 million, implying a net initial yield of 6.9 per cent. The combined company will have an occupancy rate of above 97 per cent with a WAULT exceeding 10 years. Over 90 per cent of the rental agreements have triple net features and close to 100 per cent have full CPI index adjustment. The combined company will, after the Transaction, have a net LTV below 50 per cent.

Logistea will, after the Transaction, continue its accretive growth strategy through capex projects, greenfield developments and acquisitions. The Transaction is expected to entail operational synergies of at least SEK 14 million. The combined company’s management and organization will consist of employees from both Logistea and KMC Properties. The new organization will be structured to fully leverage the human resource potential across the two companies, and ensure all complementary skills and competencies are exhausted. The executive management team is expected to include, inter alia, Niklas Zuckerman (CEO), Anders Nordvall (Deputy CEO and CIO) and Stig Wærnes (Acting COO and Integration Manager). Stig Wærnes is currently the CEO of KMC Properties.

Logistea is a Swedish real estate company in logistics, warehousing and light industrial, with the vision of being the natural partner for companies that demand modern sustainable premises in this segment. Logistea’s shares are listed on Nasdaq Stockholm. As of 31 March 2024, and including the acquisition of a property in Åmål completed after 31 March 2024, its property portfolio amounted to 73 properties with total lettable space of 672 thousand sqm, amounting to a total property value of around SEK 6.2 billion. The property portfolio has a net initial yield of 6.3 per cent, an occupancy rate of around 96 per cent and a WAULT of 8.3 years. The properties are strategically located in Sweden and have long lease agreements with solid tenants.

KMC Properties is an Oslo Børs-listed real estate company focusing on industrial and logistics properties in the Nordics, Germany, Belgium, the Netherlands and Poland. As of 31 March 2024, and including completed and ongoing acquisitions after 31 March 2024, its property portfolio amounted to 72 properties with total lettable space of 715 thousand sqm, amounting to a total property value of approximately NOK 6.9 billion. The property portfolio has a net initial yield of 7.5 per cent, an occupancy rate of around 98 per cent and a WAULT of 11.5 years. The properties are strategically located and have long lease agreements with solid tenants.

Transaction highlights

The Transaction will be executed by Logistea acquiring all shares in KMC Properties HoldCo AS (“KMC HoldCo”), a wholly-owned subsidiary of KMC Properties, and thereby acquire all of the operations in the KMC Properties group, with payment in newly issued shares in Logistea. Reflecting Logistea’s dual share class structure, KMC Properties will receive both class A and B shares in Logistea, pro rata to the current split of class A and B shares in Logistea, respectively. Following completion of the Transaction and receipt by KMC Properties of the newly issued Logistea shares, the shares will be distributed to the shareholders of KMC Properties. It is expected that approximately 80 per cent of the consideration shares will be distributed in July 2024 and that the remaining consideration shares will be distributed in late Q3 or early Q4 2024 on the basis of an audited interim balance sheet as per 31 July 2024.

Valuation of both companies for purpose of the Transaction are based on balance sheets as of 31 March 2024 and corresponds to Net Asset Value (NAV) defined as book value of equity adjusted for deferred taxes and certain minor subsequent events. The Transaction values KMC HoldCo at SEK 3,259 million. Payment of the purchase price will be made through the issuance of 16,263,577 class A shares and 214,551,706 class B shares in Logistea, which entails that for each share held in KMC Properties, shareholders in KMC Properties will in total receive around 0.04 class A shares and around 0.51 class B shares in Logistea.

The Transaction includes all of the operations in the KMC Properties group, and thus Logistea will retain both Logistea’s and KMC Properties current property management organisations (including the current employees of KMC Properties), as well as all of the assets in the KMC Properties group, except for cash and deferred taxes in the amount of approximately NOK 15 million that will remain in KMC Properties to, inter alia, satisfy certain residual obligations in KMC Properties, finance its day-to-day operations and facilitate realisation of KMC Properties post-transaction strategy (as further described below).

Following completion of the Transaction, including KMC Properties’ distribution of the consideration shares in Logistea to KMC Properties’ shareholders, BEWI Invest AS, Nordika, Rutger Arnhult through companies and Slättö will be the four largest shareholders in the combined company, with shareholdings corresponding to 17.7, 14.5, 11.4 and 10.1 per cent of the shares and 17.7, 14.7, 11.3 and 11.3 per cent of the votes respectively (upon full distribution of the consideration shares and based on current shareholding in KMC Properties).

The board of directors of Logistea after the transaction is expected to consist of Patrik Tillman (Chairman), Bjørnar André Ulstein (Vice Chairman), Mia Arnhult, Karl-Erik Bekken, Erik Dansbo, Jonas Grandér and Anneli Lindblom. Bjørnar André Ulstein is currently Chairman, and Jonas Grandér and Mia Arnhult are currently directors, in KMC Properties.

Completion of the Transaction is subject to approval by extraordinary general meetings in Logistea and KMC Properties respectively, approval by bondholders in KMC Properties, and confirmation that the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) will approve the listing prospectus to be prepared by Logistea.

The board of directors of Logistea and the board of directors of KMC Properties will today convene extraordinary general meetings in each company to approve the Transaction and adopt related proposals, to be held on 9 July 2024 and 5 July 2024, respectively.

Certain large shareholders of Logistea, inter alia, Slättö, Rutger Arnhult and close relatives, Fjärde AP-fonden, Länsförsäkringar Fonder, Dragfast AB and Patrik Tillman and close relatives, that together hold approximately 54.6 per cent of the shares and 59.6 per cent of the votes in Logistea have undertaken to vote in favor of the Transaction at the extraordinary general meeting of Logistea. Further, Nordika and Carnegie Fonder that together hold approximately 13.9 per cent of the shares and 13.5 per cent of the votes in Logistea have expressed their intention to vote in favor of the Transaction. In aggregate, shareholders representing 68.4 per cent of the shares and 73.1 per cent of the votes in Logistea have thereby expressed their support for the Transaction.

Certain large shareholders of KMC Properties, i.e. BEWI Invest ASA, Nordika, Corvus Estate AS, Kastor Invest AS and M2 Asset Management AB that together hold approximately 68.7 per cent of the shares and votes in KMC Properties have undertaken to vote in favor of the Transaction and related proposals at the extraordinary general meeting of KMC Properties. Nordika's voting undertaking is subject to certain conditions.

Jonas Grandér, board member in Logistea and KMC Properties, and Mia Arnhult, board member in KMC Properties, have conflict of interests in relation to the Transaction, and have not participated and will not participate in the respective board of directors’ handling of or decisions on matters related to the Transaction.

KMC Properties will today submit a request for a written procedure among the holders of its senior secured bond loan in the nominal amount of approx. NOK 900 million (the “Bond") to approve that the Bond is transferred to a subsidiary of KMC HoldCo (KMC Properties AS) with a guarantee from Logistea. Holders of the Bond representing approximately 40 per cent of the nominal amount of the Bond have undertaken to vote in favor of such approval. KMC Properties have received the support of 100 per cent of the bondholders which have been wallcrossed.

The class A shares and the class B shares of Logistea will continue to be listed on Nasdaq Stockholm. Logistea will have its headquarters in Stockholm.

KMC Properties will following completion of the Transaction pursue real estate investment opportunities, which will be non-competing and have a different profile than the combined company (e.g. more focus on development projects). KMC Properties is as part of this strategy negotiating a letter of intent for the acquisition of a number of properties out of an existing property portfolio. KMC Properties expects to remain an Oslo Stock Exchange listed company following the Transaction.

Due to the Transaction, Logistea has resolved to reschedule the publication of its Q2 interim report from 11 July to 12 July 2024.

“We are very pleased to announce this transformational transaction where we combine two attractive and similar companies and property portfolios into one. I am looking forward to develop Logistea with my current and new colleagues with the aim to strengthen the offer to our tenants and becoming the natural choice for logistics and industrial companies,” says Niklas Zuckerman, CEO of Logistea.

“The announced transaction today is a strategic milestone for both Logistea and KMC. The combined company forms a leading Nordic logistics, warehouse and light industrial real estate company with a very strong financial and operational starting point. From this strong foundation we aim to continue work hard and capture future growth prospects and deliver best in class shareholder value,” says Patrik Tilman, Chairman of the board of Logistea.

“We look forward to joining forces with Logistea and believe that the combined company will be able to accelerate accretive growth beyond what two individual companies can achieve. The capabilities of the combined organisations will most likely create added platform value that should increase market pricing beyond net asset value (NAV) to the advantage for all shareholders,” says interim CEO of KMC Properties Stig Wærnes.