KMC Properties ASA

M&A Activity • Jun 14, 2024

LOGISTEA AND KMC PROPERTIES TO COMBINE AND FORM A LEADING NORDIC LOGISTICS, WAREHOUSE AND LIGHT INDUSTRIAL REAL ESTATE COMPANY

LOGISTEA AND KMC PROPERTIES TO COMBINE AND FORM A LEADING NORDIC LOGISTICS, WAREHOUSE AND LIGHT INDUSTRIAL REAL ESTATE COMPANY

KMC Properties ASA (“KMC Properties”), listed on Oslo Børs and Logistea AB (publ) (“Logistea”), listed on Nasdaq Stockholm, have today entered into an agreement whereby Logistea will combine with KMC Properties (the “Transaction”) by acquiring all of the operations in the KMC Properties group through payment in newly issued shares. The combined company will as a result of the Transaction form a leading Nordic logistics, warehouse and light industrial real estate company with strategic focus on long-term growth, financial stability and sustainability. The Transaction will also significantly expand and diversify the combined company's operations, improve its growth prospects and access to capital and enhance its in-house capabilities. The Transaction values both companies based on reported net asset value (NAV) as of 31 March 2024 adjusted for certain minor subsequent events (this represents a price per share in KMC Properties of NOK 7.88). The relative ownership between shareholders in Logistea and KMC Properties in the combined company, which will operate under the company name Logistea, will be approximately 51 per cent and 49 per cent respectively. The Transaction is, subject to certain conditions, expected to be completed on or about 11 July 2024.

Company highlights

• The combined property portfolio will consist of a lettable area of around 1.4 million sqm, split across 145 properties in Sweden, Norway, Denmark, Finland, the Netherlands, Belgium, Germany and Poland, with the large majority of the assets located in Sweden and Norway.

• The combined company will have a property value exceeding SEK 13 billion and generate net operating income of almost SEK 900 million, implying a net initial yield of 6.9 per cent. The combined company will have an occupancy rate of around 97 per cent with a WAULT exceeding 10 years. Over 90 per cent of the rental agreements have triple net features and close to 100 per cent have full CPI index adjustment. The combined company will, after the Transaction, have a net LTV below 50 per cent.

• Logistea will, after the Transaction, continue its accretive growth strategy through capex projects, greenfield developments and acquisitions. The Transaction is expected to entail operational synergies of at least SEK 14 million. The combined company’s management and organization will consist of employees from both Logistea and KMC Properties. The new organization will be structured to fully leverage the human resource potential across the two companies, and ensure all complementary skills and competencies are exhausted. The executive management team is expected to include, inter alia, Niklas Zuckerman (CEO), Anders Nordvall (Deputy CEO and CIO) and Stig Wærnes (Acting COO and Integration Manager). Stig Wærnes is currently the CEO of KMC Properties.

• KMC Properties is an Oslo Børs-listed real estate company focusing on industrial and logistics properties in the Nordics, Germany, Belgium, the Netherlands and Poland. As of 31 March 2024, and including completed and ongoing acquisitions after 31 March 2024, its property portfolio amounted to 72 properties with total lettable space of 715 thousand sqm, amounting to a total property value of approximately NOK 6.9 billion. The property portfolio has a net initial yield of 7.5 per cent, an occupancy rate of around 98 per cent and a WAULT of 11.5 years. The properties are strategically located and have long lease agreements with solid tenants.

• Logistea is a Swedish real estate company in logistics, warehousing and light industry, with the vision of being the natural partner for companies that demand modern sustainable premises in this segment. Logistea’s shares are listed on Nasdaq Stockholm. As of 31 March 2024, and including the acquisition of a property in Åmål completed after 31 March 2024, its property portfolio amounted to 73 properties with total lettable space of 672 thousand sqm, amounting to a total property value of around SEK 6.2 billion. The property portfolio has a net initial yield of 6.3 per cent, an occupancy rate of around 96 per cent and a WAULT of 8.3 years. The properties are strategically located in Sweden and have long lease agreements with solid tenants.

Transaction highlights

• The Transaction will be executed by Logistea acquiring all shares in KMC Properties HoldCo AS (“KMC HoldCo”), a wholly-owned subsidiary of KMC Properties, and thereby acquire all of the operations in the KMC Properties group, with payment in newly issued shares in Logistea. Reflecting Logistea’s dual share class structure, KMC Properties will receive both class A and B shares in Logistea, pro rata to the current split of class A and B shares in Logistea, respectively. Following completion of the Transaction and receipt by KMC Properties of the newly issued Logistea shares, the shares will be distributed to the shareholders of KMC Properties. It is expected that approximately 80 per cent of the consideration shares will be distributed in July 2024 and that the remaining consideration shares will be distributed in late Q3 or early Q4 2024 on the basis of an audited interim balance sheet as per 31 July 2024.

• Valuation of both companies for purpose of the Transaction are based on balance sheets as of 31 March 2024 and corresponds to Net Asset Value (NAV) defined as book value of equity adjusted for deferred taxes and certain minor subsequent events. The Transaction values KMC HoldCo at SEK 3,259 million. Payment of the purchase price will be made through the issuance of 16,263,577 class A shares and 214,551,706 class B shares in Logistea, which entails that for each share held in KMC Properties, shareholders in KMC Properties will in total receive around 0.04 class A shares and around 0.51 class B shares in Logistea.

• The Transaction includes all of the operations in the KMC Properties group, and thus Logistea will retain both Logistea’s and KMC Properties current property management organisations (including the current employees of KMC Properties), as well as all of the assets in the KMC Properties group, except for cash and deferred taxes in the amount of approximately NOK 15 million that will remain in KMC Properties to, inter alia, satisfy certain residual obligations in KMC Properties, finance its day-to-day operations and facilitate realisation of KMC Properties post-transaction strategy (as further described below).

• Following completion of the Transaction, including KMC Properties’ distribution of the consideration shares in Logistea to KMC Properties’ shareholders, BEWI Invest AS, Nordika, Rutger Arnhult through companies and Slättö will be the four largest shareholders in the combined company, with shareholdings corresponding to 17.7, 14.5, 11.4 and 10.1 per cent of the shares and 17.7, 14.7, 11.3 and 11.3 per cent of the votes respectively (upon full distribution of the consideration shares and based on current shareholding in KMC Properties).

• The board of directors of Logistea after the transaction is expected to consist of Patrik Tillman (Chairman), Bjørnar André Ulstein (Vice Chairman), Mia Arnhult, Karl-Erik Bekken, Erik Dansbo, Jonas Grandér and Anneli Lindblom. Bjørnar André Ulstein is currently Chairman, and Jonas Grandér and Mia Arnhult are currently directors, in KMC Properties.

• Completion of the Transaction is subject to approval by extraordinary general meetings in Logistea and KMC Properties respectively, approval by bondholders in KMC Properties, and confirmation that the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) will approve the listing prospectus to be prepared by Logistea.

• The board of directors of Logistea and the board of directors of KMC Properties will today convene extraordinary general meetings in each company to approve the Transaction and adopt related proposals, to be held on 9 July 2024 and 5 July 2024, respectively.

• Certain large shareholders of KMC Properties, i.e. BEWI Invest ASA, Nordika, Corvus Estate AS, Kastor Invest AS and M2 Asset Management AB that together hold approximately 68.7 per cent of the shares and votes in KMC Properties have undertaken to vote in favor of the Transaction and related proposals at the extraordinary general meeting of KMC Properties. Nordika's voting undertaking is subject to certain conditions.

• Certain large shareholders of Logistea, i.e. Slättö, Rutger Arnhult and close relatives, Fjärde AP-fonden, Länsförsäkringar Fonder, Dragfast AB and Patrik Tillman and close relatives, that together hold approximately 54.6 per cent of the shares and 59.6 per cent of the votes in Logistea have undertaken to vote in favor of the Transaction at the extraordinary general meeting of Logistea. Further, Nordika and Carnegie Fonder that together hold approximately 13.9 per cent of the shares and 13.5 per cent of the votes in Logistea have expressed their intention to vote in favor of the Transaction. In aggregate, shareholders representing 68.4 per cent of the shares and 73.1 per cent of the votes in Logistea have thereby expressed their support for the Transaction.

• Jonas Grandér, board member in Logistea and KMC Properties, and Mia Arnhult, board member in KMC Properties, have conflict of interests in relation to the Transaction, and have not participated and will not participate in the respective board of directors’ handling of or decisions on matters related to the Transaction.

• KMC Properties will today submit a request for a written procedure among the holders of its senior secured bond loan in the nominal amount of approx. NOK 900 million (the “Bond ") to approve that the Bond is transferred to a subsidiary of KMC HoldCo (KMC Properties AS) with a guarantee from Logistea. Holders of the Bond representing approximately 40 per cent of the nominal amount of the Bond have undertaken to vote in favor of such approval. KMC Properties have received the support of 100 per cent of the bondholders which have been wallcrossed.

• The class A shares and the class B shares of Logistea will continue to be listed on Nasdaq Stockholm. Logistea will have its headquarters in Stockholm.

• KMC Properties will following completion of the Transaction pursue real estate investment opportunities, which will be non-competing and have a different profile than the combined company (e.g. more focus on development projects). KMC Properties is as part of this strategy negotiating a letter of intent for the acquisition of a number of properties out of an existing property portfolio. KMC Properties expects to remain an Oslo Stock Exchange listed company following the Transaction.

• Due to the Transaction, Logistea has resolved to reschedule the publication of its Q2 interim report from 11 July to 12 July 2024.

“We look forward to joining forces with Logistea and believe that the combined company will be able to accelerate accretive growth beyond what two individual companies can achieve. The capabilities of the combined organisations will most likely create added platform value that should increase market pricing beyond net asset value (NAV) to the advantage for all shareholders,” says interim CEO of KMC Properties Stig Wærnes.

“We are very pleased to announce this transformational transaction where we combine two attractive and similar companies and property portfolios into one. I am looking forward to develop Logistea with my old and new colleagues with the aim to strengthen the offer to our tenants and becoming the natural choice for logistics and industrial companies.” says Niklas Zuckerman, CEO of Logistea

“The announced transaction today is a strategic milestone for both Logistea and KMC. The combined company forms a leading Nordic logistics, warehouse and light industrial real estate company with a very strong financial and operational starting point. From this strong foundation we aim to continue work hard and capture future growth prospects and deliver best in class shareholder value.” says Patrik Tilman, Chairman of the board of Logistea

See the full press release attached to this announcement.

Advisors

Carnegie AS and DNB Markets, a part of DNB Bank ASA are acting as financial advisors and Advokatfirmaet Thommessen AS as to Norwegian law and Advokatfirman Vinge as to Swedish law are acting as legal advisors to KMC Properties in connection with the Transaction. ABG Sundal Collier AB and Nordea Bank Abp, filial i Sverige, are acting as financial advisors and Advokatfirman Cederquist as to Swedish law and Advokatfirmaet Wiersholm AS as to Norwegian law are acting as legal advisors to Logistea in connection with the Transaction.

Invitation to a conference call for analysts and investors

The Transaction is presented in closer detail by Niklas Zuckerman, CEO, and Anders Nordvall, Deputy CEO and Head of Transactions, in a presentation webcast/teleconference held in English for investors and the press at 11:00 (CEST) today, Friday 14 June 2024.

To follow the presentation webcast, please use this link (https://ir.financialhearings.com/logistea-presentation-juni-2024). To participate via teleconference, please register via this link (https://conference.financialhearings.com/teleconference/?id=5006268). After registration you will be provided a phone number and a conference ID to access the conference. You can ask questions verbally via the teleconference.

For additional information, please contact

Stig Wærnes, interim CEO of KMC Properties ASA

+47 915 66 386

stig.waernes@kmcp.no

Christian Linge, interim CFO of KMC Properties ASA

+47 466 37 846

christian.linge@kmcp.no

Information in this announcement is considered inside information pursuant to the EU Market Abuse Regulation (MAR) and is subject to the disclosure requirements pursuant to MAR article 17 and Section 5-12 the Norwegian Securities Trading Act. This announcement was published by Christian Linge interim CFO in KMC Properties ASA at 10:00 CEST on 14 June 2024.

About KMC Properties ASA

KMC Properties is an Oslo Børs-listed real estate company focusing on industrial and logistic properties. The company has a diversified portfolio of properties in the Nordics, Belgium, Germany and the Netherlands. The properties are strategically located and have long lease agreements with solid tenants. KMC Properties has an ambitious strategy to grow the portfolio through further development of existing properties, as well as M&A initiatives.

Important information

The release, publication or distribution of this press release may, in certain jurisdictions, be restricted by law and persons into whose possession this press release or any information referred to herein comes should inform themselves about and observe any such restrictions. This press release is not for release, publication or distribution, directly or indirectly, in whole or in part, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia, the “United States”), Australia, Canada, Hong Kong, Japan, South Africa or any other jurisdiction where such release, publication or distribution would constitute a violation of the relevant laws or regulations of such jurisdiction.

This press release does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States, Australia, Canada, Hong Kong, South Africa or any other jurisdiction in which such offers or sales are unlawful (the “Excluded Territories”).

The securities referred to in this press release have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or under the securities laws of any state of the United States, and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. Subject to certain limited exceptions, the securities referred to in this press release are being offered and sold only outside the United States. 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 addition, the securities issued in connection with the Transaction have not been and will not be registered under any applicable securities laws of any state, province, territory, county or jurisdiction of the other Excluded Territories. Accordingly, such securities may not be offered, sold, resold, taken up, exercised, renounced, transferred, delivered or distributed, directly or indirectly, in or into the Excluded Territories or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration of such securities in, the relevant jurisdiction.

This press release is not a prospectus for the purposes of Regulation (EU) 2017/1129 (the "Prospectus Regulation") and has not been approved by any regulatory authority in any jurisdiction.

In the United Kingdom, this press release and any other materials in relation to the securities described herein is being distributed only to, and is directed only 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" (within the meaning of the United Kingdom version of the Prospectus Regulation which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) 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"). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

This press release 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 securities. Any investment decision to acquire or subscribe for securities in Logistea or KMC Properties must be made on the basis of all publicly available information relating to Logistea and KMC Properties and their securities, respectively. Such information has not been independently verified by ABG Sundal Collier AB or Nordea Bank Abp, filial i Sverige. ABG Sundal Collier AB and Nordea Bank Abp, filial i Sverige is acting for Logistea in connection with the Transaction and no one else and will not be responsible to anyone other than Logistea for providing the protections afforded to its clients nor for giving advice in relation to the transaction or any other matter referred to herein.

This press release does not constitute an invitation to warrant, subscribe, or otherwise acquire or transfer any securities in any jurisdiction. This press release does not constitute a recommendation for any investors' decisions regarding the Transaction, Logistea or KMC Properties. Each investor or potential investor should conduct a self-examination, analysis and evaluation of the business and information described in this press release and any publicly available information.

Forward-looking statements

This press release contains certain forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Logistea believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.

The combined company’s actual results of operations, including the combined company’s financial condition and liquidity and the development of the industry in which the combined company operates, may differ materially from and be more negative than those made in, or suggested by, the forward-looking statements contained in this press release. Factors, including risks and uncertainties that could cause these differences include, but are not limited to risks associated with implementation of the combined company’s strategy, risks and uncertainties associated with the combined company’s ability to develop new services and enhance existing services, the impact of competition, changes in general economy and industry conditions, and legislative, regulatory and political factors.

The information, opinions and forward-looking statements contained in this press release speak only as at its date and are subject to change without notice. Logistea does not undertake any obligation to review, update, confirm or release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this communication.

Combined earnings capacity

The presentation of the combined earnings capacity included in this press release is not to be equated with a forecast, but is intended to reflect a normal year. The actual outcome may differ due to decisions that affect the outcome positively or negatively in relation to normal years as well as unforeseen events. The presented earnings capacity does not include an assessment of changes in rent, vacancy or interest rates and is only intended to make visible the actual conditions on the respective balance sheet date for income and expenses given, for example, the capital structure and organisation at each balance sheet date. Logistea's income statement is also affected by changes in value and changes in the property portfolio. None of this has been taken into account in the presented earnings capacity. Net operating income is based on leases contracted on the balance sheet date and normalised, non-recoverable property costs for the current portfolio. In addition, rental value, property costs and estimated financing costs on an annual basis are included for the ongoing projects planned to be completed in 2024 and 2025, where leases have been signed.