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Paris-based retail property REIT Klépierre said on Monday that its 56.1%-controlled Steen & Strøm unit has agreed the acquisition of Oslo City, a retail and office complex located in the heart of the Norwegian capital, from insurer DNB livsforsikring.

The deal was was carried out jointly with Entra, a Norwegian office-focused property firm with the Norwegian state as the largest shareholder.

Both partners will acquire the holding company that owns Oslo City for a total of €528 mln. Steen & Strøm and Entra will then demerge the property into two separate retail and office assets in 2016. Pangea Property Partners acted as adviser to DNB.

Following the demerger, Steen & Strøm will fully own the shopping centre and half of the parking spaces for a net investment of €344 mln. Entra will own the office premises and the other half of the parking spaces.

Located in Oslo’s main transportation hub, Oslo City has the highest footfall in Norway. It covers a total of 33,000 m2 of retail space and 34,000 m2 of office space as well as 340 parking spaces.

The fully occupied complex is located in a very dense urban area in the immediate vicinity of the Bjorvika district, Oslo’s new Central Business District, and very close to Karl Johans gate, Oslo’s main pedestrian retail street.

Oslo City will add €17 mln to Steen & Strøm’s net rental income on an annual basis. With average sales per m2 reaching €13,000, most units in the shopping centre rank among the most profitable of their respective network in Norway.

Stronger presence in Scandinavia
The acquisition will reinforce Klépierre’s position in Scandinavia, where it currently operates a €3.5 bn portfolio of 21 shopping centres.

Steen & Strøm will finance 53% of the acquisition in equity through a capital injection by its shareholders – Klépierre and APG, proportionate to their existing stakes – and 47% through external debt and available cash. The impact of the transaction on Klépierre’s consolidated Loan-to-Value will be limited to circa 50 bps.

Closing of the transaction is expected to occur by year-end 2015.

'We are happy to have succeeded in our negotiations to sell Oslo City with two well-recognised and professional players in their respective markets. We have owned the building since 1994, and during these years, Oslo City has been developed to become one of Norway’s best shopping centres. The next development phase will take place under new ownership,' said Tom Rathke, group executive vice president in DNB.