Extra distribution of real estate company

In addition to the ordinary dividend, in February 2020 Peab’s Board proposed an extra distribution of all the shares in a newly formed company holding Peab’s wholly owned, fully developed commercial properties. As a result of the spread of the coronavirus and its effects on external circumstances and financial markets Peab’s Board decided on March 24, 2020 to withdraw the proposal to the Annual General Meeting concerning an extra distribution of all the shares in the newly formed real estate company. With the uncertain situation in the world this is not the right time to list the company. Peab continues to believe that a distribution of the properties is the solution that will over time provide shareholders with the greatest value. Therefore the operative work of building and structuring the real estate company is continuing as planned. The Board intends to summon an extraordinary General Meeting to decide on distribution of the real estate company when the situation has stabilized and conditions are more favorable.

Peab consists of four collaborating business areas – Construction, Civil Engineering, Industry and Project Development, each one of them an essential component of the Group. In recent years Peab has invested considerable resources in the capital intense business areas Industry and Project Development, a strategy that will continue in the future.

Project development operations comprise development of both housing and commercial projects and are run primarily in wholly owned form but in certain cases through partially owned companies as well. For appreciation purposes fully developed properties have mainly been kept in partially owned companies but they have also been on Peab’s balance sheet. In order to create the right conditions in the future for operative steering, tied up capital and income recognition in project development operations various alternatives have been analyzed. At the beginning of 2020 the Board and executive management therefore evaluated the future direction of wholly owned, fully developed commercial property.

With this in mind the Board has decided that for Peab’s shareholders the best alternative for long-term value growth is to form a separate real estate company, Annehem Fastigheter, holding Peab’s wholly owned, fully developed commercial and housing properties that will be distributed to existing shareholders according to Lex Asea and listed. In this way Peab can focus on developing and building while Annehem Fastigheter can focus on owning and managing fully developed property.

Annehem Fastigheter manages and develops high quality commercial, community and residential property with a clear environmental profile located with good mass transit in the Nordic growth areas Stockholm, Skåne/Göteborg as well as Helsinki and Oslo. Annehem Fastigheter builds lasting relationships and value through management close to customers. Initially Annehem Fastigheter owns fully developed properties with a total market value of around SEK 3,000 million. In addition, 50 percent ownership in two joint venture companies – Nya Bara Utvecklings AB and Point Hyllie Holding AB – is included. Annehem Fastigheter has also signed a contract with Peab to acquire three properties located in Solna, Oslo and Helsingborg respectively, which will be taken over after they are completed.

After the distribution Peab’s project development operations will consist of wholly owned development rights for housing and commercial projects, projects under construction as well as ownership of the major joint ventures that contain fully developed property but also a large portion of future project developments. This consists primarily of Peab’s 50 percent in Fastighets AB Centur and 33 percent in Tornet Bostadsproduktion AB.

The board of Annehem Fastigheter consists of Göran Grosskopf, Pia Andersson, Jesper Göransson and Anders Hylén. Göran Grosskopf has been appointed chairman. Before it is listed further board members will be added to Annehem Fastigheter’s board. Jörgen Lundgren has been appointed CEO and Jan Egenäs will be CFO of Annehem Fastigheter. Jörgen Lundgren leaves his position as CEO of Solnaberg Property AB (publ). Jörgen has previously held positions as President and CEO of Fastighetsaktiebolaget Norrporten and is, among other things, currently a board member of Aros Bostäder and vice chairman of Mäklarhuset.

When the conditions are right the Board intends to summon an extraordinary General Meeting to propose an extra distribution of all the shares in Annehem Fastigheter to existing shareholders according to Lex Asea. Peab’s shareholders will then receive shares in Annehem Fastigheter in addition to their existing stake in Peab.

The distribution is conditional on the consent of Peab’s lenders and that Annehem Fastigheter receives financing on market terms. The level of equity and pledges in Annehem Fastigheter will be decided in consultation with the financing banks.

When Annehem Fastigheter is distributed the difference between market values and book values as well as eliminated construction contract profit will be taken up as income in Peab’s consolidated accounts. In February 2020 this amounted preliminarily to around SEK 1,200 million, which primarily corresponds to the reduction in equity in the Group caused by the extra distribution. The effect on profit will be updated in connection with the future distribution decision based on circumstances at the time.

Further information to Peab’s shareholders regarding the proposal for distribution of Annehem Fastigheter, in the form of an information brochure, will be published on Peab’s website in connection with publishing the summons to attend the extraordinary General Meeting.

Annehem Fastigheter owns 50 percent of the shares in Point Hyllie Holding AB that holds Choice Hotel and office building The Point in Hyllie, Malmö.

50 percent ownership of Nya Bara Utvecklings AB, a joint venture owned together with Volito, is included in Annehem Fastigheter .