Sponda - Company Announcement

Sponda to sell 12 logistics properties and its shares in real estate funds to a new logistics and industrial property investment company

Sponda Plc               Stock exchange release 30 April 2014 at 8:45 am

Sponda to sell 12 logistics properties and its shares in real estate funds to a
new logistics and industrial property investment company 

Sponda Plc has signed a letter of intent for the sale of 12 logistics
properties to a new logistics and industrial property investment company,
Certeum Oy, for EUR 216.7 million. The total debt-free sale price of the
properties is equal to their combined fair value calculated in the first
quarter of 2014. 

The transaction is part of a broader arrangement in which Sponda and Varma
Mutual Pension Insurance Company, Sponda Fund I (SF I), Sponda Fund II (SF II)
and Sponda Fund III (SF III) have agreed on establishing a new company
specialising in investments in logistics and industrial properties, with the
newly established company acquiring 12 logistics properties from Sponda, 22
logistics and industrial properties from Varma, as well as SF I, SF II and SF
III, or all property companies owned by the three funds. The total value of the
properties to be acquired is approximately EUR 920 million. As part of the
broader arrangement, Sponda will become a minority shareholder in the new
company with an estimated holding of 38% at most. 

The fair value of the equity invested by Sponda in the funds stood at EUR 74.8
million at the end of March 2014. Sponda estimates that the sale price will
exceed the fair value by approximately EUR 2.6 million. 

Grounds for the sale

In September 2013, Sponda's Board of Directors confirmed the company's new
strategy, the main goals of which are simplification of the business structure,
more focused property ownership and profitable growth in office and shopping
centre properties in Helsinki and Tampere. According to the strategy, Sponda is
planning to divest its logistics properties and properties located in Russia.
Sponda's strategy also includes exiting the real estate funds business. 

Properties sold and their effect on Sponda's result

The logistics properties that are being sold are as follows:

Property                        Address                       Leasable area (m²)
--------------------------------------------------------------------------------
Malmin Kankirauta Kkoy          Kankiraudantie 6, Helsinki                 6,603
--------------------------------------------------------------------------------
Ruosilantie 14 Kkoy             Ruosilantie 14, Helsinki                  11,307
--------------------------------------------------------------------------------
Ruosilantie 16 Kkoy             Ruosilantie 16, Helsinki                  23,144
--------------------------------------------------------------------------------
Ruosilantie 18 Kkoy             Ruosilantie 18, Helsinki                   5,960
--------------------------------------------------------------------------------
Espoon Juvanpuisto Koy          Juvan Teollisuuskatu 23,                  11,291
                                 Espoo                                          
--------------------------------------------------------------------------------
Olarintörmä Koy                 Olarinluoma 14, Espoo                      5,368
--------------------------------------------------------------------------------
Kuninkaankaari Koy              Heidehofintie 2, Vantaa                   15,967
--------------------------------------------------------------------------------
Kuninkaankruunu Koy             Heidehofintie 4, Vantaa                    8,585
--------------------------------------------------------------------------------
Vantaan Honkatalo Koy           Vanha Porvootie 229, Vantaa               56,314
--------------------------------------------------------------------------------
Vantaan Vanha Porvoontie 231    Vanha Porvoontie 231, Vantaa              16,989
 Koy                                                                            
--------------------------------------------------------------------------------
Tonttipaino Koy                 Toinen savu 8, Vantaa                      5,974
--------------------------------------------------------------------------------
Vantaan Kuussillantie 27 Koy    Kuussillantie 27, Vantaa                   4,164
--------------------------------------------------------------------------------



The average economic occupancy rate of the properties is 80.2% at present.
Their average net yield at present is 7.2%. After the transaction is concluded,
the share of the newly established company's result corresponding to Sponda's
holding will be recorded under the item “Share of result of associated
companies” in the income statement. The impact of the transaction will be cash
flow -neutral in the long-term. 

“The sale of these logistics properties is in line with our new strategy
announced last autumn. The sale of real estate funds, or the property companies
they own, is also in line with the new strategy. I am particularly satisfied
that we were able to carry out the sale at the fair value calculated for the
first quarter, or slightly above that amount. 

Establishing a new property investment company Certeum in Finland is certain to
increase interest in our property sector as a whole. We are pleased to be a
founding member in the new company in partnership with other strong investors.
Our goal is to have the new company operating at full speed in late 2014”, says
Sponda's President and CEO Kari Inkinen. 

Certeum Oy
After the sale is concluded, the key shareholders of Certeum will be Varma
Mutual Pension Insurance Company, Sponda Plc and the State Pension Fund.
Further shareholders in the new company will include the unitholders of the
real estate funds SF I, SF II and SF III, or the real estate funds themselves,
depending on the final structure of the transaction. After the conclusion of
the sale, Sponda's holding in the new company is estimated at 38% at most, and
Sponda has made a commitment to not sell its shares in Certeum before its
Annual General Meeting in spring 2015. In line with its strategy, Sponda plans
to reduce its ownership in the company in the future. 

As part of the sale, Certeum has agreed to acquire properties for a total sum
of approximately EUR 920 million. The company plans to finance the transaction
partly by debt financing, and it has received the necessary conditional
commitments from financing partners to fund the arrangement. The company's
loan-to-value (LTV) will be approximately 50%. The company estimates that the
transaction will be concluded by the end of September 2014, once the standard
conditions for acquisitions are satisfied. 

Sponda's prospects for 2014

As a result of the arrangement, Sponda is adjusting its prospects for 2014 with
respect to the development of net operating income. The economic occupancy rate
forecast remains unchanged. 

Economic occupancy rate
Sponda expects the economic occupancy rate of the Group's properties at
year-end 2014 to be at the same level as at the end of 2013. This estimate is
based on the slow positive development of the Finnish economy as well as
current information on expiring leases. 

Net operating income
According to the previously stated outlook, net operating income (excluding
disposals) in 2014 was expected to be at the same level as in 2013. Upon the
conclusion of the arrangement, Sponda expects net operating income for 2014 to
amount to EUR 175-183 million (including the net operating income of the
properties being sold for the period they are under Sponda's ownership). The
adjustment to the prospects is primarily based on the completion of the sale of
12 logistics properties and holdings in real estate funds at the end of
September 2014. 

Press conference and conference call

In conjunction with publishing its interim report and announcing this
transaction, Sponda will arrange an analyst and press conference in Finnish on
30 April 2014 at 10:00 a.m. at Sponda, Korkeavuorenkatu 45, Helsinki, in the
Vuosaari conference room. After the result has been published, the stock
exchange release and the presentation materials from the press conference will
be available on the company website at www.sponda.fi. 

An international conference call for analysts and investors will be held in
English on 30 April 2014 at 11:30 a.m. Participate in the call by calling the
number +44 (0)20 7162 0077, code: 943263, and watch a webcast at
http://qsb.webcast.fi/s/sponda/sponda_2014_0430_q1 

A recording of the conference call and webcast can be accessed later on the
company website at www.sponda.fi > investors > results centre. 



Sponda Plc



For additional information, please contact:
Kari Inkinen, President and CEO, tel. +358 400 402 653
Pia Arrhenius, SVP, Corporate Planning and IR, tel. +358 40 527 4462
CFO Erik Hjelt, tel. +358 400 472 313