KlaraBo Sverige

“KlaraBo is and will be a growth company. After the recent years’ generally weak transaction market, we now see the opportunity to complement our organic growth with an acquisition that is significant for us and fully in line with our overall strategy and proven business model. KlaraBo is well positioned for continued growth and sees economies of scale with a larger property portfolio in a region where we are already established. The current acquisition will provide a stable continuous return and enable us to add further value through active management and ongoing refinement over time. This creates value for both our tenants and our shareholders,” says Andreas Morfiadakis, CEO of KlaraBo.

Background and motives

KlaraBo has entered into a conditional agreement to acquire a property portfolio in Fredriksdal in the municipality of Helsingborg from the Rikshem Group. The property portfolio consists of pure residential properties that fit well into KlaraBo’s business model with value-creating management. The Acquisition consists of 740 apartments and a lettable area of approximately 57,000 square metres. The properties are acquired for an agreed property value of SEK 850 million before deduction of deferred tax, which is estimated to amount to approximately SEK 31 million, and deductions for certain commenced and planned construction work of approximately SEK 11 million. The property value corresponds to approximately SEK 15,000 per square metre. Approximately 63 per cent of the apartments are estimated to have value-creating renovation potential. The properties are expected to have rental income of approximately SEK 76 million and a net operating income of SEK 43 million in 2025, implying a yield of approximately 5.2 per cent calculated on property value after deduction of deferred tax.

The Acquisition is in line with KlaraBo’s overall objective to create value through long-term ownership, development and active management of sought-after residential properties in growth regions. The quality, location and development potential of the portfolio are also in line with KlaraBo’s growth strategy and with significant renovation potential, KlaraBo has the opportunity to increase the standard of the properties through sustainable investments and at the same time create an improved cash flow and net operating income. KlaraBo estimates that the apartment renovations are expected to generate an average yield of 6–8 per cent and identified energy efficiency improvements are expected to generate up to 8–10 per cent in return on investment. The company already owns 91 apartments in Helsingborg, which creates favourable conditions for efficient management.

In order to, in addition to bank debt, finance the Acquisition and furthermore finance value-creating investments in KlaraBo’s property portfolio, KlaraBo’s Board of Directors has resolved to carry out the Rights Issue. Upon full subscription, the Company intends to use the net proceeds of approximately SEK 373 million, after deduction of issue costs, for the following purposes and priorities:

• Partially finance the Acquisition to an amount of approximately SEK 298 million. The remaining part is mainly financed with bank debt.
• Finance value-creating investments in KlaraBo’s property portfolio to an amount of SEK 75 million.

The Acquisition and the Rights Issue are expected to contribute positively to KlaraBo’s income from property management per share, both in the short and long term, and provide the opportunity for continued value creation through active management and distribution of central costs on a larger property portfolio. In addition, the Company’s interest coverage ratio will be further strengthened, while the loan-to-value ratio will remain unchanged.

Further information about the Acquisition

The Acquisition is made by KlaraBo through an acquisition of a property owning company from the Rikshem Group which includes the seven properties Batteriet 1, Batteriet 3, Batteriet 8, Batteriet 9, Brigaden 1, Värnet 2 and Värnet 3 in Helsingborg municipality. The agreed property value for the portfolio amounts to SEK 850 million.

The preliminary purchase price, after deduction of deferred tax (corresponding to 5.15 per cent of the difference between the taxable value of the properties on the date of closing and the agreed property value), and deductions for certain commenced and planned construction work of approximately SEK 11 million, amounts to approximately SEK 808 million. The final purchase price will be determined after closing and is based on the closing accounts of the property owning company. Closing is expected to take place on 31 January 2025.

The Acquisition is conditional upon KlaraBo receiving sufficient financing for the Acquisition. The Acquisition will be financed through a combination of new debt and a new share issue, consisting of senior bank debt and the Rights Issue. The interest margin for the bank debt financing of the Acquisition will, based on a fixed interest period of 3 years, be significantly below the average margin for KlaraBo’s total loan portfolio, amounting to 1.47 per cent, as communicated by the Company in a press release on 1 November 2024.

Summary of the Rights Issue

• The subscription period runs from and including 9 December up to and including 23 December 2024.
• The subscription price per B share is SEK 15. No brokerage fee is payable.
• The record date is 5 December 2024. The last day of trading in KlaraBo’s shares including the right to receive subscription rights is 3 December 2024 and the first day of trading excluding the right to receive subscription rights is 4 December 2024. Trading in subscription rights and interim shares (Sw. betald tecknad aktie, “BTA”) will take place on Nasdaq Stockholm.
• The offering comprises a maximum of 26,057,868 B shares, entailing proceeds of a maximum of approximately SEK 391 million before issue costs, which are calculated to amount to a maximum of approximately SEK 18 million.
• Those who are registered in the share register as shareholders in KlaraBo on the record date will receive one (1) subscription right for each share held in KlaraBo. The subscription right entitles the holder to subscribe for new B shares with pre-emption rights, whereby five (5) subscription rights entitle the holder to subscribe for one (1) new B share.

Terms and conditions of the Rights Issue

Those who on the record date of 5 December 2024 are registered as shareholders in the share register maintained by Euroclear Sweden AB on behalf of KlaraBo have pre-emption rights to subscribe for new B shares in proportion to the number of A shares and B shares held by the holder on the record date. For each share held in KlaraBo (regardless of share class), one (1) subscription right is received. The subscription rights entitle the holder to subscribe for new B shares with pre-emption rights, whereby five (5) subscription rights entitle the holder to subscribe for one (1) new B share.

The subscription price per B share is SEK 15. No brokerage fee is payable.

The subscription period runs from and including 9 December 2024 up to and including 23 December 2024 with the right for KlaraBo’s Board of Directors to extend the subscription period and the time for payment. Trading in subscription rights will take place on Nasdaq Stockholm during the period from and including 9 December 2024 up to and including 18 December 2024 and trading in BTA will take place during the period from and including 9 December 2024 up to and including 9 January 2025.

In the event that not all B shares are subscribed for by exercise of subscription rights, the Board of Directors shall, within the framework of the maximum amount of the Rights Issue, resolve on allotment of shares subscribed for without subscription rights in accordance with the following principles, subject to the exclusion of allotment to shareholders residing in certain unauthorised jurisdictions. In the first instance, allotment shall be made to those who have subscribed for B shares with subscription rights, whether or not they were shareholders on the record date. In the event that allotment cannot be made in full to these shareholders, allotment shall be made pro rata in relation to the number of B shares subscribed for by exercise of subscription rights and, to the extent that this cannot be done, by drawing of lots. In the second instance, allotment shall be made to others who have applied for subscription of B shares without subscription rights. In the event that allotment cannot be made in full to these, allotment shall be made pro rata in relation to the number of B shares stated in the respective application form, and to the extent this cannot be done, by drawing lots. Thirdly, allotment shall be made to those who have undertaken to guarantee the Rights Issue, pro rata in relation to the guaranteed amount, and to the extent this cannot be done, by drawing lots.

The Rights Issue implies that the Company’s share capital will be increased by a maximum of SEK 1,302,893.40, from the current SEK 6,591,394.15 to a maximum of SEK 7,894,287.55, and the number of shares by a maximum of 26,057,868, from the current 131,827,883 to a maximum of 157,885,751[1] (of which 16,300,000 A shares and 141,585,751 B shares). KlaraBo’s shareholders have pre-emption rights to subscribe for the new B shares in proportion to the number of shares they own on the record date (regardless of share class). The subscription price has been set at SEK 15 per B share, which means that the Rights Issue, if fully subscribed, will provide KlaraBo with approximately SEK 391 million before deduction of issue costs, which are calculated to amount to a maximum of approximately SEK 18 million including compensation for guarantee undertakings.

Shareholders who choose not to participate in the Rights Issue will, upon full subscription of the Rights Issue, have their shareholding diluted by approximately 16.5 per cent and their voting rights diluted by approximately 8.6 per cent, but have the opportunity to financially compensate for the dilution effect by selling their subscription rights.

Subscription and guarantee undertakings

In connection with the Rights Issue, the Company has received subscription undertakings from a number of the Company’s existing shareholders, including board members and senior executives, as well as Investment Aktiebolaget Spiltan, Ralph Mühlrad, Wealins S.A., Anders Pettersson and family, Lennart Sten and Andreas Morfiadakis. Subscription undertakings received amount to approximately 27 per cent of the Rights Issue. In addition to the subscription undertakings, Investment Aktiebolaget Spiltan and Wealins S.A. have undertaken to guarantee SEK 200 million and SEK 50 million respectively, together corresponding to approximately 64 per cent of the Rights Issue. In total, the aforementioned shareholders have provided subscription and guarantee undertakings to subscribe for a total of approximately 91 per cent of the Rights Issue.

In addition, Odin Forvaltning and Länsförsäkringar Fondförvaltning have expressed their intention to subscribe for shares in the Rights Issue.

No compensation will be paid for the subscription undertakings. A cash compensation of 3 per cent of the maximum guaranteed amount will be paid for guarantee undertakings. Neither the subscription nor the guarantee undertakings are secured by bank guarantees, blocked funds, pledges or similar arrangements. Further information about the parties that have entered into the subscription and guarantee undertakings will be included in the prospectus that will be published prior to the record date for the Rights Issue.

Indicative timetable for the Rights Issue

Prospectus

Full terms and conditions of the Rights Issue and further information regarding KlaraBo will be provided in the prospectus that the Company expects to publish on 4 December 2024.

Advisors

ABG Sundal Collier AB (“ABG”) and Swedbank AB (publ) (“Swedbank”) are acting as Joint Global Coordinators in connection with the Rights Issue. Fredersen Advokatbyrå AB is acting as legal advisor to KlaraBo in connection with the Rights Issue and the Acquisition. Svefa AB has acted as commercial advisor to the Company and Rikshem Group in connection with the Acquisition.

[1] Total number of shares in the Company after the Rights Issue including 1,538,542 B shares held by the Company.