Alm Equity and Aermont Capital Real Estate Fund V have signed an agreement to form a Joint Venture for the portfolio of assets that ALM Equity is merging into from Svenska Nyttobostäde. The aim is to implement and accelerate the business plan communicated by ALM Equity and develop new housing, sell completed apartments on the condominium market and manage rental housing. The parties' ambitions are to acquire additional land for the development of housing in Stockholm. For ALM Equity, the transaction also means that liquidity is freed up, which lowers net indebtedness and momentarily creates a net cash position in the parent company.

"We have experienced great interest in collaborations from financial actors in the real estate sector and it feels very satisfying to have landed this strategic collaboration with an experienced real estate investor like Aermont. It will give us opportunities to accelerate the implementation of our communicated business plan for the assets from Nyttobostäder, muscles to capture interesting opportunities that will now appear on the market and long-term reduced indebtedness in the parent company. I look forward to being involved in order to both start construction projects and find new assets to acquire," says Joakim Alm, CEO ALM Equity.

The joint company will be owned 40 percent by ALM Equity and 60 percent by Aermont, the holding will be reported as an associated company after the transaction. ALM Equity sells 60 percent of Nyttobostäder for SEK 1.9 billion based on book values, where the underlying property value totals approximately SEK 8.4 billion. In total, the transaction includes around 2,200 investment homes, 1,000 completed homes being sold on the condominium market and legally binding building rights for around 2,100 more homes. The deal contains approximately 100,000 square meters of lettable area and building rights for approximately 130,000 square meters of light BTA.

ALM Equity will return with more complete effects on equity and the result of the transaction after all conditions for the merger have been met. Based on the assumption of a share price in ALM Equity of SEK 200 for the ordinary share and SEK 78 for the preference share at the time of the merger with Nyttobostäder, the combined profit effect of the merger of Nyttobostäder and the transaction with Aermont is estimated to amount to approximately SEK -600m.

ALM Equity will be responsible for the operation of the joint venture and its assets. Linked to the transaction, ALM Equity undertakes to offer contracting agreements where the subsidiary 2XA Entreprenad is given the opportunity to carry out contracts for an estimated order value of approximately SEK 1.5 billion. The parties have further undertaken to contribute additional capital to finance future asset acquisitions. ALM Equity's commitment linked to this amounts to a maximum of SEK 600m. ALM Equity has committed to, during a two-year period, give the joint company a "first right of refusal" to carry out possible investments in building rights that ALM Equity identifies, in relation to carrying out investments under ALM Equity's own auspices. In order to ensure development of the building rights, the parties have also committed to providing more capital, of which ALM Equity's commitment is maximized at SEK 200m.

In the long term, the transaction is expected to create cash flow effects of approximately SEK 3.6 billion for ALM Equity, including the fees that will be received for managing the joint company. The current liquidity addition amounts to SEK 1.9 billion. Dividends from the joint company will be made according to an agreed distribution, according to which Aermont shall have priority for dividends related to existing assets of approximately SEK 200 million annually, dividends thereafter shall be pro rata until certain return requirements are met, when ALM Equity is entitled to a increased share of dividend exceeding its pro rata share.

The shareholder agreement between the parties will be entered into upon entry and include, among other things, regulations regarding corporate governance, veto catalog, transfer restrictions, exit and commitment related to Joakim Alm as a key person (implying a requirement that he retain a certain part of his share ownership in ALM Equity and have an involvement in it the joint company's operations). The parties have a customary mutual right to buy the counterparty's shares at a discount of up to a maximum of 25 percent in the event of a significant breach of the agreement, for example in the event of a breach of ALM Equity's commitments related to Joakim Alm as a key person. Such violations on the part of ALM Equity could mean substantial financial damage.

The transaction is conditional on the merger process between ALM Equity and Svenska Nyttobostäder being completed, as well as approval from the lenders concerned. The conditions are deemed to have been met during the month of October. After the transaction, in addition to liquidity of SEK 1.9 billion, ALM Equity will have a holding of 40 percent in the joint company, which is valued at approximately SEK 700 million.