Real estate arrangement

Kesko Corporation, the Swedish life insurance company AMF Pensionsförsäkring AB and Ilmarinen Mutual Pension Insurance Company have agreed to set up a joint venture called Ankkurikadun Kiinteistöt Oy with equal shares. The joint venture will own, manage and develop store sites acquired to it and primarily used by Kesko Group.

According to the framework agreement concerning the arrangement, Ankkurikadun Kiinteistöt will acquire 34 store sites and two shopping centres in Finland and Sweden from Kesko. It will also acquire one shopping centre from Kruunuvuoren Satama Oy and two store sites from Kesko Pension Fund in Finland. The whole includes the shopping centres Merituuli in Espoo, Karisma in Lahti and Veturi in Kouvola. Retail stores operating at the store sites and shopping centres are 15 K-citymarkets, 17 K-supermarkets, nine K-rauta stores and one Rautia K-maatalous store. Six of the K-rauta store sites are located in Sweden.

"We are pleased that the real estate arrangement long underway has been concluded with well-known and valued partners. As a result of the arrangement, Kesko's current strong financial position will further strengthen and provide a good basis for the development of the company in line with the future new strategy," says Kesko's President and CEO Mikko Helander.

The combined fair value of the store sites and shopping centres to be acquired is €652 million. The properties owned by Kesko Group companies account for €485 million of the total. If implemented, the arrangement is estimated to generate a non-recurring gain of approximately €76 million to Kesko.

Kesko Group companies will lease the store sites sold to the joint venture for their use under long-term leases of 15 years in Finland and 10 years in Sweden. In the Karisma and Veturi shopping centres, Group companies will lease the premises they use under leases of 5-15 years. As a result of the arrangement, Kesko Group's lease liabilities will increase by €453 million. Lease liabilities are not classified as financial leasing.

Kesko's equity investment in the joint venture is approximately €67 million and cash flow to Kesko from the arrangement, if implemented, will be around €405 million. The company will be included in Kesko Group's financial reporting as an associate starting from the implementation of the arrangement.

The establishment will be concluded and the operations of the company will start by the end of June provided that the required approvals have been obtained from the authorities and the other terms of the implementation of the arrangement have been met.


 

Further information

Stock exchange release 08.05.2015: Kesko has agreed to set up a joint real estate investment company with AMF Pensionsförsäkring and Ilmarinen

Stock exchange release 28.11.2014: Kesko to continue preparations for real estate arrangement

Stock exchange release 29.11.2013: Kesko looks into setting up a real estate investment trust

Real estate operations

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