Acquiring, restructuring and divesting the listed Swedish property company Tornet on behalf of a international private equity consortium.
Background 2004 – Leimdörfer introduces the Swedish property market and a local partner to a leading global investment bank’s private equity-division.
• In 2004, Leimdörfer identified the listed property company Tornet as an interesting ‘public to private’ candidate with substantial potential to add value.
• Tornet was the second largest listed property company in Sweden at the time with assets worth approximately €2,000 million. The property portfolio comprised approximately 120 properties with a total lettable area exceeding one million m².
• Leimdörfer approached the London-based investment bank Lehman Brothers Real Estate Partners with this investment opportunity and identified Ratos, one of the leading Swedish private equity firms, as an appropriate local partner.
• In February 2004, Lehman Brothers and Ratos acquired Tornet in the largest M&A property transaction worldwide that year (according to the magazine EuroProperty) with Leimdörfer as sole financial advisor.
Post-acquisition 2004/2005 – Leimdörfer assisting in restructuring and value adding divestments
• Following the acquisition, Leimdörfer assisted the new owners forming and implementing a major restructuring plan. Tornet adopted a new overall business strategy and a new management team was put in place.
• Over the next 18 months, the company concentrated its portfolio to Stockholm, Gothenburg and Malmö by divesting properties worth approximately €950 million. These profitable divestment opportunities were identified and executed by Leimdörfer, e.g.: o 90 residential properties, 40 office/industrial properties and 2 shopping centres in Linköping/Norrköping worth €470 million. o 3 residential properties in Västerås worth €65 million. o 1 shopping centre in Malmö worth €70 million.
• Substantial value was created through a strategy in which:
o Properties that had been acquired at discount indirectly through the stock market were divested without discount on the property market.
o The remaining holdings of Tornet became, through the divestments, more specialised by property type and geographical location, which clarified Tornet’s competitive strengths and led to an increase in the stock market’s valuation.
Exit 2005 – Leimdörfer initiates and executes a successful divestment
• In December 2005, Leimdörfer advised Lehman Brothers and Ratos when divesting Tornet by selling the shares and thereby achieving a full exit.
• At that point, Tornet’s assets were worth approximately €1,050 million and the company owned 120 properties with a total lettable area above one million m².
• The Swedish listed property company Fabege acquired the shares at a significant bid premium.
• The deal, from acquisition to exit, proved to be a highly successful investment for Lehman Brothers and Ratos generating an annual IRR above 70 %.
• In the companies’ press release Ratos’ CEO Arne Karlsson said: ‘We are very pleased to be able to give our shareholders this news. Tornet has turned out to be one of Ratos’ most successful investments’ and Lehman Brothers’ managing director Mark H. Newman said ‘This has been one of our keynote deals’.
• The deal has attracted vast attention in media, beyond the real estate community as well.
• Leimdörfer initiated and finalised value-adding processes in three steps – acquisition, restructuring and exit – for the benefit of Tornet’s investors. • The divestment of Tornet is the largest property deal in the Nordic region 2005.
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Aquisition, restructuring and divestment of 82.4% of the publicly traded property company Tornet |