OSLO, NORWAY-Oslo Properties, a 100% unit of the listed Norwegian Property, has entered into a preliminary agreement with Pandox, a joint venture of private firms Eiendomsspar and Sundt, with the aim of selling 100% of equity in its Norgani Hotels unit for $1.3 billion

The agreed price is about $95 million equivalent below a book value as of June 30, but NPRO CEO Olav Line said, "We are very satisfied with the price and the commercial terms of the transaction... A sale of our hotel real estate business is an important step in creating a more focused company with a stronger operational and financial platform for profitable growth. A sale now is definitely the right move for Norwegian Property, allowing us to swiftly and proactively re-align our balance sheet relative to the possibilities we see in the office real estate business."

Norgani, owned by NPRO since September 2007, is the leading Nordic hotel property owner, and owns 73 hotels and a conference centre, with 41 properties located in Sweden, 14 in Norway, 16 in Finland and three in Denmark. Pandox now becomes a leading European hotel real estate owner with 119 hotels with around 24,000 rooms in Sweden, Finland, Norway, Denmark, Germany, Belgium, Switzerland, Bahamas and Canada. 

CEO Olav Line said recent positive operating profit reports reflect a stable and good operation for both the hotel and office portfolios. “The work to separate the company into two independent companies for the respective office and hotel businesses is continuing. At the same time we are gradually transforming both the hotel and office businesses into fully integrated property companies with in-house competence on both development and property management,” he said.

During second quarter, the property portfolio saw positive fair value adjustments while the hotel portfolio showed a minor negative development. Positive signs within the hotel market, said Line, confirmed recovery in that sector.

Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.