26th Jun 2006 07:00
Release date: 26 June 2006Embargoed until: 07:00 CLS HOLDINGS PLC ("CLS") ANNOUNCES THE SALE OF SOLNA BUSINESS PARK, STOCKHOLM The Board of CLS Holdings plc is pleased to announce that it has contracted tosell its portfolio of six properties at Solna Business Park in Stockholm,Sweden. The purchaser Fabege, a listed Swedish property investment group, hasagreed to acquire this portfolio by way of a corporate acquisition.The transaction is based on an agreed aggregate value of the propertiesamounting to SEK 3.575 billion (‚£267.0 million), less an estimated cost of SEK350 million (‚£26.1 million) in respect of the completion of remainingrefurbishment works, tenant fit-out works and a provision for rent guaranteesalthough this may not be fully incurred. The sale reflects a yield to thepurchaser of just under 6 per cent. The settlement of the transaction will bein cash.The properties were held in the books of CLS at a valuation of SEK 2.953billion (‚£215.5 million) at 31 December 2005 which contributed to a group NAVof 607 pence per share. The annual net rental income generated by the Solnaportfolio is SEK 211 million (‚£15.8 million).The portfolio of properties was purchased between 1999 and 2005 at a total costof SEK 579 million (‚£43.2 million). The properties had been constructed duringthe 1960s and were primarily being used for mixed light industrial purposes.Since buying the properties CLS has executed a SEK 1.58 billion (‚£118.0million) extension and refurbishment programme that has transformed this localarea of Solna by creating an award winning, environmentally friendly, modernoffice park that includes a business hotel, restaurant, conference centre, alarge well equipped gym and health spa, ICA Maxi hypermarket and other retailoutlets. After seven years of ownership, the total investment by CLS is SEK 2.5billion (‚£186.7 million), inclusive of the agreed future refurbishment worksand rental guarantees mentioned above.In all, the net lettable area now comprises 137,480 sq m (1.48 million sq ft)with leases having a weighted average duration of 7 years.The unique architectural designs of the development, coupled with the flexibleutilisation of space has attracted a large number of blue chip and governmenttenants that include ICA, Coop, EDB, Green Cargo, IFS, Unilever, Banverket andSundyberg local education department.After repayment of the financing secured on the properties, the sale willrealise surplus cash of approximately SEK 1.54 billion (‚£115.0 million) onprojected completion at the end of August 2006. The resources generated fromthis sale will be held by the company for utilisation at the appropriate time.CLS continues to hold its Swedish investment in Vƒ¤nerparken, near Gothenburg,comprising health care, government offices, leisure and a university complex.About FabegeThe purchaser is Fabege, whose assets amount to SEK 25 billion (‚£1.87 billion)prior to this purchase. They already own three other properties within SolnaBusiness Park and after the purchase Fabege will own nearly 500,000 sq m (5.38million sq ft) of property within the municipality of Solna. They are activelydeveloping other projects in Solna in close liaison with the municipality.Catella Corporate Finance AB has acted as adviser to CLS.Executive Chairman for CLS, Sten Mortstedt, commented:"Our extensive redevelopment of Solna Business Park has regenerated the areaand its success in attracting high quality, substantial tenants has validatedour concept of creating an integrated business, retail and leisure destination.Furthermore I am convinced that Fabege is the best placed purchaser to continuewith the management and development of Solna Business Park.This sale will crystallise added value in a tax efficient manner, generatingsubstantial cash resources for CLS and I estimate that it will have a positiveimpact on our NAV of approximately 19 pence per share." -ends- For further information, please contact:Sten Mortstedt, Executive ChairmanPer Sjƒ¶berg, Chief Executive OfficerCLS Holdings plcwww.clsholdings.comTel. +44 (0)20 7582 7766Henry Klotz, Managing DirectorSolna Business Park ABwww.solnabusinesspark.seTel. +46 (0)8 578 770 00Mobile +46 (0)708 109 885ENDCLS HOLDINGS PLCRelated Shares:
CLS Holdings