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Norgani Hotels ASA signs the final agreement with Hotellinvest Holding AS


Norgani Hotels ASA signs the final agreement with Hotellinvest Holding AS, established by Fearnley Finans Eiendom AS, to sell four hotels in Denmark.

Following the announcement of a letter of intent on 14 November 2006 Norgani Hotels ASA has signed the final purchase agreement with Hotellinvest Holding AS to sell four Danish hotels - Clarion Copenhagen, Scandic Kolding, Scandic Glostrup and Scandic Hvidovre. The hotels have 729 rooms in total and a lettable floor area of 34,744 sqm (excluding the planned conference center for Clarion Copenhagen).

The property value in the agreement, which is structured as a share deal, is set at DKK 622.6 million (NOK 684 million). This implies an estimated property yield of approximately 6%. The property value implies a price per room of approx. DKK 854,000 (NOK 938,000) and a price per sqm of DKK 16,650 (NOK 18,298) compared to a Norgani average per third quarter 2006 of NOK 727,000 and NOK 13,900, respectively.

Capital gain is DKK 41 million (NOK 45 million) and the realized value gain is DKK 106 million (NOK116 million) where DKK 65 million (NOK 71 million) has been included in the accounts as of 30 September 2006 as increased market value. The return on equity is 90% As a result of the sale Norgani will book a gain in Q4 2006 of NOK 45 million.

Norgani will continue to manage the sold properties according to a six year agreement and will complete the construction of the planned conference center mentioned above. In connection with the transaction Norgani has guaranteed a CPI adjusted gross rent and maximum operating and investment costs for the next six years and has entered into an agreement with the buyer (maturing 2012) which enables the buyer to sell the properties back to Norgani at a negotiated sales price which is 8% lower than agreed property value. Alternatively, the property can be sold externally at marked price where Norgani has the right to buy back the hotels or share the profit according to terms set out in the agreement.

Commenting on the transaction CEO Kjell Sagstad says “We are pleased to present to the market a final agreement which is in-line with our previously announced letter of intent. We are very satisfied with the return on equity in this transaction. Even though we now sell off a substantial part of our Danish portfolio, we continue to view Denmark as an important market and will continue to develop our remaining properties and look for new opportunities.”

Norgani has also sold the property Lappinporti which is a small hotel with 40 rooms in Rovaniemi Finland. Lappinporti is considered to be a non core business property and has therefore been for sale since it was bought as a part of the Kapiteeli purchase. The property is sold for 0,8 EUR mill and the book gain and cash flow from the sale will be 0,1 EUR mill.

About Norgani
Norgani is the owner of a portfolio of 79 larger three and four star hotel properties, centrally located with an average size of 172 rooms. The weighted average lease duration for the total portfolio is approximately 8 years. Tenants include hotel operators such as Scandic/Hilton which leases 55% of the hotels, Choice Hotels Scandinavia (26%), Rezidor (6%) and other Nordic and international chains. In addition to the long lease duration, Norgani for the major part of its portfolio has minimum lease guarantees from sellers for the next 4-5 years. The hotels are located in Sweden, Finland, Norway and Denmark. In November 2005 Norgani Hotels was listed on Oslo Børs under the ticker NORGAN. The company headquarter is in Oslo.


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