Kista Galleria has an annual footfall of approximately 18.1 million visitors (the highest in Stockholm) and annual sales of US$360 million;
Citycon Oyj is a subsidiary of Gazit-Globe Group (NYSE: GZT)
Citycon Oyj (NASDAQ OMX: CTY1S), a long-term owner and developer of shopping centers in the Nordics and the Baltic countries, and Canada Pension Plan Investment Board (CPPIB), an investment management organization investing the funds of the Canada Pension Plan, have signed definitive agreements to acquire the Kista Galleria shopping center in Stockholm from DNB Livsforsikring ASA, part of DNB Group, the largest financial group in Norway. The deal is based on a property value of approximately SEK 4.6 billion (approx. US$700 million).The shopping center will be owned by a joint venture company controlled 50% by Citycon and 50% by CPPIB. The transaction is expected to be finalized in January 2013.
Kista Galleria, one of the largest and most successful shopping centers in the Stockholm area, features a well-balanced array of 185 shops and restaurants as well as cinemas, bowling, indoor go-cart and other leisure activities. Kista Galleria has 90,000 square meters of gross leasable area (GLA), including 60,000 square meters of retail space and the remaining 30,000 square meters comprising a hotel, student housing, healthcare premises and municipal services. Kista Galleria has an annual footfall of approximately 18.1 million visitors (the highest in Stockholm) and annual sales of US$360 million (third highest in Stockholm). The center underwent a complete renovation and large extension in 2002 and was further expanded in 2009. One of the driving forces behind the acquisition is Kista Galleria’s prime location in the heart of one of Europe’s growth hot spots.
Kista Galleria will be the Citycon’s largest shopping center by GLA. For CPPIB, this is the first direct property investment in the Nordics.
“The acquisition of Kista Galleria marks a major milestone in Gazit-Globe’s business development in Europe,” says Chaim Katzman, Chairman of Gazit-Globe Group. “The acquisition fits in well with the Group’s strategy of continuing to expand through the purchase of successful, yield-producing assets and contributing to their betterment by applying the global expertise and experience gained from holding more than 600 supermarket-anchored shopping centers in the United States, Canada, Europe and Brazil.
“This acquisition will strengthen the international positioning of Gazit-Globe and bolster the portfolio both of the Group and of Citycon, transforming it into one of the largest shopping center owners in Europe. Moreover, the purchase dovetails with the company’s strategy of forming partnerships with top-tier international entities,” Katzman concludes.
Marcel Kokkeel, Citycon Oyj’s CEO: “The strength of Kista Galleria is its location and traffic connections, which generate a steady footfall of more than 50,000 daily visitors. Kista Galleria is located at the epicenter of one of the fastest growing areas of Stockholm, with thousands of new residential units being built within the next few years and steady growth of the office stock. Kista Galleria’s robust footfall, driven by its strong local catchment area and infrastructure, is natural and sustainable.”
More than 125,000 people live in and 70,000 people work in Kista, the largest office sub-market outside the Stockholm city center. With its large concentration of telecoms, Internet and IT companies, the area is a rapidly expanding high-tech hub.
The shopping center is served by excellent car access and public transportation with an integrated metro and bus station, commuter train station and access to over 2,500 parking spaces. “No less important is Kista Galleria’s proximity to major highway systems, which are currently being upgraded and expanded and will make the center even more accessible in the next few years. Driven by its urban dynamics, we see lots of opportunities for further improvements and future development that will enhance this center as a place that provides an experience beyond shopping,” Kokkeel says.
“This strategic acquisition offers us a unique opportunity to increase our relevance in the eyes of international retailers, increase the quality of our portfolio and at the same time substantially strengthen our position and market share in Sweden where we already have nine shopping centres. The acquisition will help us balance our portfolio geographically, as Sweden’s share increases from approx. 25% to 40% in regards to net rental income.”
Kokkeel adds: “As part of its strategy and sustainability model, Citycon invests in shopping centers located in city centers or in other vibrant urban environments. Sweden is a rapidly urbanizing society. While the population in the total catchment area currently stands at about 345,000, it is forecast to grow substantially in the coming years. In addition, it is estimated that in the next 15 years, the population of Stockholm will increase by half a million people.”
Gro Boge, Head of DNB REIM (the property management company of DNB Group): “Kista Galleria is probably one of the most attractive shopping centers in Sweden. During our period as owners we have continuously focused on improvements to maintain and improve its market position. As the property has grown, it has become relatively large in relation to our total portfolio. We are thus happy to be selling to Citycon and CPPIB, which are ideally equipped to continue the development of this exceptional shopping center.
“The sale is in no way an indication of a withdrawal from the Swedish market on our part. The timing of the sale secured a very healthy return on the capital employed over the years and thus was a very rational economic decision. We will continue to improve the real estate portfolios under our management, i.e. the portfolios of DNB Livsforsikring ASA and DNB Scandinavian Property Fund, and are looking for new investment opportunities,” Boge concludes.
Nils Styf, Citycon’s Chief Investment Officer: “The involvement of CPPIB, a leading global institutional investor with a premier real estate portfolio, adds a seal of quality to this acquisition and also to Citycon as a professional manager of shopping centers in the Nordics. Both parties consider Kista Galleria to be the first step in an ongoing joint investment platform.”
Eero Sihvonen, Citycon CFO and Executive Vice President: “Citycon and CPPIB will jointly finance approximately half of the acquisition with a stand-alone asset backed loan financing based on five years maturity , provided by SEB (co-ordinator), Swedbank and Aareal Bank. Citycon will finance the remainder of its share from its existing lines of credit and cash. Citycon also considers possibilities to re-finance up to 50% of the company’s investment by issuing new equity through a capital increase. The details of such capital increase are still in the planning stages and any such decision is subject to approval by the shareholder’s General Meeting.”
Graeme Eadie, Senior Vice-President, Real Estate Investments, CPPIB: “We are very pleased to be making our first real estate investment in the Nordics together with Citycon, a recognized leader in this fast-growing market. We look forward to partnering with Citycon on future investment opportunities in the region as we continue to expand CPPIB’s retail portfolio in Europe.”
After the acquisition, Citycon will own a total of 38 shopping centers and 40 other retail properties. In addition, the company manages and leases two other shopping centers without owning them. In total Citycon manages a portfolio of roughly 1,090 thousand square meters. Of the company-owned shopping centers, 23 are located in Finland, 10 in Sweden, 4 in the Baltic countries and 1 in Denmark that was acquired by Citycon last summer. Citycon’s total portfolio fair value will grow from 2.7 billion euros to approx. 3.2 billion euros after the acquisition.
Leimdörfer acted as sole financial adviser, Jones Lang LaSalle as retail property adviser and Roschier as legal adviser to Citycon and CPPIB in the transaction.
About CPPIB
Canada Pension Plan Investment Board (CPPIB) is an investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, CPPIB is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. On September 30, 2012, the CPP Fund totaled C$170.1 billion of which C$18.0 billion represents real estate investments. CPPIB holds investments in major shopping centers throughout the world, including CentrO Oberhausen in Germany, Northland Shopping Centre in Australia, Northshore Mall in Massachusetts (USA), Westfield Stratford City Shopping Centre in London and Westfield Topanga Shopping Center in California. For more information, please visit: www.cppib.ca.
About Gazit Globe & Citycon
Gazit-Globe (TASE: GLOB; NYSE: GZT) is one of the world’s leading multinational real estate companies and focuses on necessity-driven real estate, primarily supermarket-anchored shopping centers in urban growth markets with high barriers to entry and attractive demographic trends. The Group operates in more than 20 countries, owns and manages over 600 properties with a gross leasable area of more than 6.6 million square meters, has a consolidated total asset value of approximately US$20 billion and a gross annualized income of about US$1.75 billion. Gazit-Globe operates internationally through its publicly traded and privately held subsidiaries:
- Citycon is an owner, developer and operator of shopping centers and commercial properties primarily anchored by supermarkets. Listed on the Helsinki Stock Exchange (NASDAQ OMX: CTY1S), Citycon is a market leader in Finland, with a strong position in Sweden and a firm foothold in the Baltic countries. Citycon owns 38 shopping centers, including the current acquisition Kista Galleria, and 40 other retail properties, with a total assets value of US$3.5 billion. In addition, the company manages and leases two shopping centers without owning them. Of the shopping centers owned by the company, 23 are located in Finland, 10 in Sweden, 4 in the Baltic countries and one in Denmark.
- Equity One is a fully integrated real estate investment trust listed on the New York Stock Exchange (NYSE: EQY). The Company owns 165 properties with a total assets value of US$3.5 billion.
- First Capital Realty is Canada’s leading owner, developer and operator of supermarket and drugstore-anchored neighborhood and community shopping centers (TSX: FCR). FCR owns 174 properties with a total assets value of C$6.6 billion.
- Atrium European Real Estate is an owner, developer and operator of shopping centers in Central and Eastern Europe. (Euronext: ATRS, VSX: ATRS). The company owns 155 shopping centers, retail properties and land, with a total assets value of close to US$3.7 billion.