• The acquisition is in line with MOFAST's strategy and represents an opportunity to grow MOFAST into a larger, attractive portfolio with potential for institutional and international interest.
• The acquisition provides potential synergies for MOFAST to decrease actual cost for central administration (SEK/sq.m.) for the aggregated portfolio. The acquisition contributes to achieve a more diversified risk in terms of the individual locations of properties through scale. The Transaction also offers the possibility to explore new markets.
• The Transaction is based on an underlying property value of SEK 842 million, after deduction of deferred tax of SEK 27 million.
• Newsec has provided an external valuation that supports the underlying property value.
• The total consideration (together with transaction related costs and working capital) is intended to be financed through a new credit facility totalling SEK 490 million and the Directed Share Issue of new shares in MOFAST generating gross proceeds of up to approximately SEK 385 million.
• Main shareholders in MOFAST have pre-committed to subscribe for a combined SEK 87 million, and SBB has pre-committed to subscribe for SEK 33 million (SEK 120 million in total) in the Directed Share Issue.
• If the Directed Share Issue is not fully subscribed, the residual of the equity financing will be covered through a shareholder loan from SBB, of up to SEK 35 million.
• The Directed Share Issue is conditional upon approval of issue authorisation for the Board of Directors by MOFAST's Extraordinary General Meeting for which a separate press release with the notice will be published today, and that the Board of Directors resolves on the Directed Share Issue by virtue of such authorisation.
• MOFAST and the target company (the "Group") combined will have a property value of approx. SEK 1,4 billion, and an estimated rental income of SEK 98 million and a net initial yield of 5,3%.
• Closing of the Transaction is planned to take place in March 2020.

"The acquisition represents a unique opportunity to acquire a portfolio generating a long term strong cash flow for MOFAST. The acquisition also achieves a well diversified add on to the existing properties and gives the company the possibility to increase NOI through active property management which offers attractive returns for the investors" says Mattias Bülow, CEO of MOFAST.

Background and reasons

MOFAST is a Swedish real estate company that owns and manages a portfolio encompassing 25 public use properties in the greater Stockholm region.

MOFAST acquired the current property portfolio in June 2019 based on an agreed property value of SEK 550 million and was financed through a share issue of SEK 200 million and a debt facility of SEK 355 million. The portfolio was acquired to a net yield of 5.1% and initial LTV was 65%.

MOFAST is a publicly listed company traded at Spotlight Stock Market. The Company has a market capitalization of approximately SEK 212 million. Average daily turnover, measured over the last 2 months, has been approximately SEK 525,000.

The real estate portfolio consists of 25 public care homes; care home for disabled people, pre-schools and health centers located in the greater Stockholm area and Mälardalen. The tenants are either public or financed by the public, resulting in a relatively secure cash flow. The portfolio encompasses a total gross lettable area of approximately 16,700 sq.m. with a total gross rental income of approximately SEK 32 million. The portfolio has a weighted average unexpired lease term of approximately 7 years.

The Company have entered into an agreement with a subsidiary to SBB to acquire 100 percent of the shares in a target company, owning a portfolio of 43 public use properties in Sweden. The Transaction is based on an underlying property value of SEK 842 million, after deduction of deferred tax of SEK 27 million. As a result of the Transaction, the Board of Directors in MOFAST has resolved to summon an Extraordinary General Meeting to approve an issue authorisation for the Board of Directors to resolve the Directed Share Issue, which will be issued as part of the financing for the Transaction. The Directed Share Issue is conditional upon, inter alia, issue authorisation granted by the Extraordinary General Meeting in MOFAST and that the Board of Directors resolves on the Directed Share Issue. The Extraordinary General Meeting will be held on 24 January 2020.

The target company consists of 43 properties, mainly within the LSS (care homes for disabled) and HVB (care homes for youth and families) segments, located foremost in the mid- and southern part of Sweden. The tenants are primarily public or financed by the public, resulting in a relatively secure cash flow. The underlying property value for the Transaction is SEK 869 million. The rental income is estimated to SEK 65 million and the NOI is estimated to SEK 47 million in 2020, which corresponds to a net yield of 5,4%. The target portfolio comprises a total of 59,000 sqm lettable area and a total land area of 365,500 sqm.

The acquisition represents an opportunity to grow MOFAST into a larger, attractive portfolio with potential for institutional and international interest.

The closing of the Transaction is planned to take place in March 2020.

MOFAST property portfolio after the acquisition

After the acquisition, MOFAST will own 68 properties with a property value of around SEK 1.4 billion and with a rental income of around SEK 98 million.

Preliminary proforma earnings capacity after the Transaction

Amounts in SEK million MOFAST Sambo Proforma
Rental income 32.8 65.0 97.7
Property costs -4.1 -17.8 -21.9
Net operating income 28.7 47.2 75.8
Central administration -3.1 -4.6 -7.7
Profit before financial items 25.6 42.6 68.1
Net financials -9.5 -12.3 -21.8
Profit from property management 16.0 30.3 46.3 

The proforma showing earnings capacity per annum, based on the current property composition and rent roll / contract base. The earnings capacity does not include an assessment of the future development of rent, vacancy rates, real estate costs, interest rates, changes in value, purchase or sale of properties or other factors.

The rental income is based on the current rent roll / contracted rent for the two portfolios respectively as per December 2019, and is adjusted according to a 2% CPI change to represent the 2020 level.

Property costs consist of an assessment of normalised operating costs, maintenance expenses and property management.

Financial income and expenses have been calculated on the basis of the company's actual average interest rate and credit portfolio, but have not been adjusted for effects regarding accrual of loan costs.

The figures should be considered as theoretical estimates and are presented for illustrative purposes only.

Preliminary proforma balance sheet

[][][]
Amounts in SEK MOFAST 30 Sep 2019 Financing Acquisition Proforma
million
ASSETS        
Properties 559.5 - 871.0 1,430.5
Plot rights 7.2 - - 7.2
Non-current assets 566.7 - 871.0 1,437.7
         
Accounts 7.7 - - 7.7
receivables
Prepayments and 1.7 - - 1.7
accrued income
Other receivables 0.6 - - 0.6
Cash and cash 18.1 875.0 -871.0 22.1
equivalents
Current assets 28.1 875.0 -871.0 32.1
         
TOTAL ASSETS 594.8 875.0 - 1,469.8
EQUITY AND        
LIABILITIES
Share capital 2.0 3.9[1] - 2.0
Other equity 198.0 381.1[1] - 583.0
Retained earnings / 10.1 - - 10.1
profit for the year
Equity 210.1 385.0 - 560.1
         
Deferred tax 6.1 - - 6.1
Long-term interest 354.7 490.0 - 844.7
-bearing debt
Leasing debt, plot 7.2 - - 7.2
rights
Non-current  368.0 490.0  -  858.0
liabilities
         
Accounts payable 0.6 - - 0.6
Tax payable 1.0 - - 1.0
Other short-term 5.4 - - 5.4
liabilities
Accrued costs and 9.8 - - 16.8
prepaid income
Current liabilities 16.8 - - 16.8
         
TOTAL EQUITY AND 594.8 875.0 - 1,469.8
LIABILITIES
         
KPIs        
Number of shares 2.00 3.85[1] - 5.85
(in million)
Loan to value (%) 63%     59%
Operating result 8.0     7.9
per share (SEK)
Interest coverage 2.7x     3.1x

[1]For illustrative purposes, assuming that the Directed Share Issue is fully subscribed and a subscription price of SEK 100 per share.

The proforma balance sheet is based on the balance sheet for MOFAST as per 30 September 2019, and is adjusted for the financing and acquisition of the properties in order to present a combined proforma balance sheet after the Transaction. The illustrated booked property value for the acquisition is based on the purchase price of SEK 842 million and capitalised transaction costs of SEK 29 million. The property value is supported by an external valuation provided by Newsec.

Consideration

The purchase price is based on an underlying property value of SEK 842 million, after deduction of deferred tax of SEK 27 million. The transaction related costs and working capital requirement totals to SEK 33 million.

Interest-bearing financing

MOFAST will enter into an additional credit facility of approximately SEK 490 million in relation to the acquisition. The credit facility is based on a binding offer. The loan maturity is approximately 6 years with the same covenants as the existing credit facility.

If the Directed Share Issue is not fully subscribed, the residual equity financing will be covered through a shareholder loan from SBB, of up to SEK 35 million. The shareholder will be remunerated with an interest rate equal to the equity yield. The shareholder loan can be converted to equity, in part or in full, by a set-off issue at the same subscription price as in the Directed Share Issue.

Issue of shares

The Board of Directors in MOFAST has resolved to request an authorisation to issue shares from the Extraordinary General Meeting, by virtue of which the Board of Directors will resolve on the Directed Share Issue.

MOFAST will issue new shares, generating gross proceeds of SEK 350 million to SEK 385 million, to finance part of the Consideration. Institutional and qualified investors have committed to subscribe for a combined SEK 120 million in the Directed Share Issue.

Conditions for the closing of the Transaction

The closing of the Transaction is conditional upon:

1. the Extraordinary General Meeting resolution to authorize the Board of Directors to resolve on the Directed Share Issue, and;
2. the Directed Share Issue raises a minimum gross proceed of SEK 350 million.

If these conditions are not fulfilled within a specified time period from the signing of the sale and purchase agreement, both MOFAST and SBB have the right to terminate the sale and purchase agreement.

Transaction costs

MOFAST total costs for the Transaction are estimated to amount to approximately SEK 29 million, which includes approximately SEK 18 million in arrangement fees, approximately SEK 6 million in due diligence costs and start-up costs and approximately SEK 5 million in debt financing establishment costs.

Financial, legal and commercial advisors

Carnegie Investment Bank AB (publ) is acting as financial advisor and sole bookrunner, Wigge & Partners, Svalner, Real Value Management and Amblin as transaction advisors to MOFAST.

Preliminary timetable for completion of the Transaction

23 Dec, 2019                             Announcement of the Transaction

27 Dec, 2019                             Notice to Extraordinary General Meeting in MOFAST

24 Jan, 2020                              Extraordinary General Meeting in MOFAST

3 Mar, 2020                                Closing of the Transaction

Extraordinary General Meeting and voting commitments

The Transaction is conditional upon that the Extraordinary General Meeting amend the articles of association and resolves on the issue authorisation for the Directed Share Issue. These resolutions will require the support of shareholders representing not less than two-third of both the votes cast and of the shares represented at the Extraordinary General Meeting in MOFAST. If this condition, or any other condition precedent for completion of the Transaction, is not fulfilled within a specified time period from the signing of the acquisition agreement, both MOFAST and SBB have the right to terminate the sale and purchase agreement.

An Extraordinary General Meeting in MOFAST is planned to be carried out on 24 January 2020 to approve the authorisation for the Board of Directors to resolve the issuance of shares. For further information, please refer to the notice and announcement of the outcome in the Directed Share Issue in separate press releases which will be published later on, and the documentation which will be held available on MOFAST's website, https://www.mofastab.se

Further information

For further information, please contact:

Mattias Bülow, managing director Mälardalens Omsorgsfastigheter Holding AB

Mail: post@mofastab.se

Tel: +46 (0) 707-450 16

Mälardalens Omsorgsfastigheter Holding AB (publ)
c/o Kvalitena AM AB
Strandvägen 5 A
114 51 Stockholm

Organisation number: 559124-6052
Homepage: www.mofastab.se

Disclaimer

This information is information that Mälardalens Omsorgsfastigheter Holding AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 07:00 CET on 23 December 2019.

Important information

This announcement is not an offer to sell or a solicitation of any offer to buy or subscribe for any securities issued by Mälardalens Omsorgsfastigheter Holding AB (publ) in any jurisdiction where such offer or sale would be unlawful. In any EEA Member State that has implemented Regulation (EU) 2017/1129 (the "Prospectus Regulation"). This press release is not a prospectus for purposes of the Prospectus Regulation and has not been approved by any regulatory authority in any jurisdiction. The Company has not authorized any offer to the public of securities in any EEA member state and no prospectus has been or will be prepared in connection with the Directed Share Issue. In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation.

The information contained herein is not for publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, New Zealand, Hong Kong, Japan, Singapore, South Africa or South Korea. This document does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities in the United States. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States.

In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, "qualified investors" (as defined in section 86(7) of the Financial Services and Markets Act 2000) and who are (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). Persons who are not relevant persons should not take any action on the basis of this document and should not act or rely on it.

This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the new shares. Any investment decision to buy or subscribe for new shares in the Share Issue must be made solely on the basis of publicly available information, which has not been independently verified by Carnegie Investment Bank AB (publ) (the "Manager"). The Manager is acting for the Company in connection with the transaction and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the transaction or any other matter referred to herein.

The information in this announcement may not be forwarded or distributed to any other person and may not be reproduced in any manner whatsoever. Any forwarding, distribution, reproduction or disclosure of this information in whole or in part is unauthorised. Failure to comply with this directive may result in a violation of the Securities Act or the applicable laws of other jurisdictions.

This announcement does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities in any jurisdiction. This announcement does not constitute a recommendation concerning any investor's option with respect to the Share Issue. Each investor or prospective investor should conduct his, her or its own investigation, analysis and evaluation of the business and data described in this announcement and publicly available information. The price and value of securities can go down as well as up. Past performance is not a guide to future performance. Neither the content of the Company's website nor any website accessible by hyperlinks on the Company's website is incorporated in, or forms part of, this announcement.