Madison International Realty and Søylen Eiendom have formed a joint venture company which will own nine properties located in Oslo’s premier shopping district.
The properties, valued at NOK3bn, are all on and around Karl Johan, Oslo’s main street.
Under the terms of the transaction, Madison will acquire 30 per cent of the equity in the new company for circa NOK310m, with Søylen holding the rest. This brings the total amount of equity held by the new company to circa NOK1bn. Søylen Eiendom and related companies previously held 100 per cent of the assets.
The new company’s portfolio includes the famous shopping centre EGER Karl Johan as well as Posthallen, a well-known place for aficionados of good wine and food. Søylen’s 50 per cent share of Steen & Strøm, which covers a total of 92,000 square metres, will also be part of the portfolio. Since the establishment of EGER in 2009, Søylen has concentrated on building up retail properties with prestigious brands. Their current tenants include Gucci, Hamleys, Bottega Veneta, Hermes and Marc by Marc Jacobs.
Søylen is in continuous dialogue with other luxury international brands, and it is expected that more will be added over time to further enhance the overall quality of the portfolio. Turnover for the retail outlets in EGER Karl Johan and Steen & Strøm in 2013 is expected to reach NOK1.2bn, split fairly evenly between them.
Carl Erik Krefting, chair of Søylen Eiendom and the newly established company, says: “We have acquired a very competent and solid partner as a shareholder in the new company.
“Madison was enthusiastic about our business concept and has appreciated the quality of our property portfolio. Nine properties are involved, with prime locations on and around Egertorget square, and several of them accommodate prestige shops. This is a portfolio with interesting prospects.”
Derek Jacobson, managing director for European investment at Madison International Reality, adds: “We consider quality, location and management when investing in new ventures, and the new company has, in our view, brought together prestigious properties with a promising potential.
“The macroeconomic outlook in Norway is unmatched in Europe and retail is experiencing increased demand, particularly in the luxury segment. As such, we are pleased to partner with Søylen in this new venture, since they have been visionary in developing a shopping area in Oslo which meets growing demand in the high-end market.”
This transaction represents Madison’s second investment in the Norwegian property market. Madison initially acquired a 35 per cent holding in Statoil’s newly built regional office at Fornebu outside Oslo at the end of 2012.
Søylen Eiendom will use part of the proceeds from the transaction to repay the seller credit related to the purchase of Steen & Strøm.
Søylen Eiendom has been assisted in the transaction by Arctic Securities. Madison was advised by Malling & Co. in assessing the market.