Nordics' most connected data center | ~9.5% annual dividend 23-year - - PowerPoint PPT Presentation
Nordics' most connected data center | ~9.5% annual dividend 23-year remaining lease agreement with a market leading data center service provider Project Finance 23-year Blue chip Zero Property value remaining international economical SEK
Project Finance
Unique data infrastructure location Residual risk protection
01.03.2017
Property value SEK 480m Blue chip international tenant 23-year remaining lease period Zero economical vacancy Rent per sqm of SEK 1,013 ~9.5% annual dividend
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Carnegie AS, organization number 936 310 974 (Carnegie) with business address Fjordalléen 16, Aker Brygge, 0250 Oslo, is acting as the sole arranger for the investment in the property and as a business manager and administrator for the investment company. Carnegie will collaborate with Carnegie Investment Bank AB, organization number 516406-0138, in the distribution of equity in the project. This presentation (the “Presentation”) has been prepared by Carnegie in connection with the investment / subscription of shares in Data Center Invest 1 AB (the Company). The subscription is carried out with the aim to capitalize the company to be able to acquire all shares in Niam V Sic AB, org.no. 556660-5597 (the Property company). The Property company owns the Property Vandenbergh 9, with the address Mariehällsvägen 40-44, Bromma. The purpose of the Presentation is to provide a description of how investors can invest in the property by subscribing for shares in the company at issue. The Presentation does not constitute an offer for subscription of shares in the Company. Terms and conditions for investment / subscription of shares in the company is stated in a separate offer to subscribe for shares (subscription form) prepared by Carnegie, arranger of the issue (hereinafter also referred to as Manager). In the following, the term "property" is used on both the Company and the property unless stated otherwise. At the date of this Presentation a binding agreement to purchase the property is not yet signed. The acquisition of the property will take place after the Company has obtained sufficient binding interests from investors and after satisfactory legal, financial and (depending on conditions) technical due diligence of the property, and received and achieved a satisfactory debt financing and purchase agreement for the acquisition of the property. Carnegie reserves the right without any liability and at its sole discretion to modify, terminate or suspend the buying process, structure or terms of the transaction, at any time and without notice and grounds, until a binding contract and any other agreements are signed.
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Equinix generic data center
major metropolitan areas in 15 countries on five continents.
EBITDA of USD 1.7bn. The ultimate parent company is listed on NASDAQ (Ticker: EQIX) and has a credit rating of BB+ (Standard & Poor).
services, and consequently demand for data centers.
exit in year 2040.
15 years remaining lease period, the IRR is estimated to 11.1%
attractive yield-spread and boosts the project IRR.
Attractive and predictable dividend capacity 5
The investment case secure reduced residual risk
SEK 1,013 per sqm, provides a solid long-term cash flow.
The lease is CPI-adjusted 100%, on an annually basis.
point, connection to multiple power grids and a central location in Stockholm.
1,300/sqm. This is SEK ~300/sqm higher than the current rent level for the property and hence reduce residual risk.
Estimated annual dividend ~9.5% Nordics' most connected data center Gross area ~23,500 sqm Property value SEK 480m Equinix has BB+ S&P rating ~23 year remaining lease period
Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
Global tenant, in an industry with increasing demand
The Property ~8 km – 10 min.
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Key financial figures The Property is located just outside Stockholm city center
Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
Financing SEK (000) Per sqm Net yield Gross property value 480,000 20,426 4.8 % Estimated deduction for latent tax gains
Tax losses carried forward +/- gain and loss account Estimated purchase price 464,000 19,745 5.0 % Arrangement fees 9,600 Estimated DD, start up and debt arrangement fees 5,400 Estimated transaction costs 15,000 Estimated working capital 5,000 Estimated total project price 484,000 20,596 4.8 % % of Sources and uses SEK (000) Per sqm total capital Bond financing 312,000 13,277 64.5 % Equity 172,000 7,319 35.5 % Total capital 484,000 20,596 100.0 % % of Key figures (2017E) SEK (000) Per sqm total capital Gross rent 23,800 1,013 100.0 % Maintenance and insurance fees 700 30 2.9 % Property tax 0.0 % Net operating income 23,100 983 97.1 % Adm, audit, accounting and Nordic Trustee fees 700 30 2.9 % EBITDA 22,400 9,532 94.1 %
0% 50% 100% 150% 200% 250% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
Cash flow in % of equity
Dividend Accumulated dividend
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The target dividend policy is quarterly distributions, with the first estimated distribution in Q4'17 / Q1'18 (not illustrated in cash flow as this is on a full- year basis).
and refinancing at the same terms after 10 years.
15 years remaining lease period the IRR is estimated to 11.1%.
covenant structure in the initial bond financing offer (LTV<70%), and financing terms when the debt is to be refinanced.
Cash-flow in % of equity* Sensitivity analysis
*Based on annual CPI-adjustments (October index) of 1.8% in 2017, 2.5% in 2018, 2,9% in 2019 and 2% after this Source: http://www.riksbank.se/Documents/Rapporter/PPR/2017/170215/dat_ppr_170215_H09e88lkj_sv.xlsx Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
1.1.2025 1.1.2030 1.1.2040 4.30 % 13.6 % 12.1 % 10.9 % 4.55 % 12.3 % 11.5 % 10.7 % 4.80 % 11.1 % 10.9 % 10.5 % 5.05 % 9.8 % 10.3 % 10.3 % 5.30 % 8.6 % 9.7 % 10.1 % PV 2017 2040 5.0 % 5.5 % 6.0 % 813 1,297 9.3 % 8.9 % 8.6 % 913 1,456 9.8 % 9.4 % 9.1 % 1,013 1,616 10.2 % 9.9 % 9.5 % 1,113 1,775 10.6 % 10.2 % 9.9 % 1,213 1,935 11.0 % 10.6 % 10.3 % Gross rent per sqm Net exit yield Time of exit Average yield for sale
Rent per sqm in 2017 value
Vandenbergh 9 in 2014 from NAPF Sweden AB.
1. The residential unit: An old office section which is to be demolished and replaced with residential units, marked in red ("the Residential Unit"). Niam is the responsible owner of this section. 2. The Property: A data center / office / storage and parking section, marked in blue in the illustrations below ("the Property“).
with shorter durations. However, Equinix is obligated to pay rent and costs related to these areas when they become vacant. As such Equinix can prudently be viewed as the sole tenant for The Property and the only counterparty which has to be assessed.
About the transaction
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Source: Catella Project Nuvola teaser and market overview, Niam Information
The Property today The Property after development of residential units
The Residential Unit "Not in Target" The Property - Equinix Data Center The Property - Equinix Data Center
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Equinix generic data center
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Source: http://www.sapdatacenter.com/article/data_center_functionality/, Catella Project Nuvola conversion calculation & market overview, Equinix information
Low energy costs Political stability Sustainable energy sources Low risk
disasters Proper weather conditions
Number of data centers in large Nordic cities
A brief introduction to data centers
A data center is a facility used to store computer systems and associated components, such as telecommunications, storage units, servers and cables. A data center is generally located near a fiber crossing point, since significant internet speed is crucial for a data center. A data center is often connected to two separate grid sectors, to secure against power outage from one grid operator. A data center generates large amounts of heat. Thus, cooling a data center is essential, and the costs to do so are often considerable. A data center has very high security measures, it usually operates its own automatic fire extinguishing systems.
Why the Nordic region is an attractive place to establish data centers
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Source: Catella Project Nuvola conversion calculation & market overview, Equinix information
The Property has a unique location for data center operations due to: According to Equinix, the Property is the most connected data center in the Nordic region, with more than 150 telecommunication carriers and internet service providers connected.
crucial data infrastructure location, and of high importance to both public- and private sector.
signed a 25-years lease agreement, and further guaranteed lease for the entire 23.500 sqm in the Property when the lease agreement was renegotiated in 2015.
strategically important location.
years including extension.
agreement expire. Therefore, a renegotiation of the agreement with Equinix or another competing company is viewed as likely scenario. Connection to multiple Power grids Dark fiber crossing point Central location in Stockholm
Equinix generic data center
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Equinix generic data center
Equinix in brief Key facts
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Source: www.equinix.com, Equinix Annual report 2015 and Equinix Q4 2016 report
countries on five continents.
allows its customers to place equipment in close proximity to employees, customers, partners and population centers.
leading global data center providers by market share.
regions (Americas, APAC and EMEA).
in Europe, fortifying its position as one of the largest providers in the region.
Operates 150 data centers Headquarter in California (US) Founded in 1998 8,000+ customers 99.999% reliability Operations on five continents
A sample of power brands that use Equinix's data centers
2,000 3,000 4,000 5,000 6,000 2017 2018 2019 2020 2021 >2021
Debt obligations maturity profile in USD millions
500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 2012 2013 2014 2015 2016
Revenue development - in USD millions
400 600 800 1,000 1,200 1,400 1,600 1,800 2012 2013 2014 2015 2016
EBITDA development - in USD millions
Equinix
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Revenues 2016 USD 3,4bn Adjusted EBITDA 2016 USD 1,7bn Credit rating: BB+ (S&P)
Source: www.equinix.com, Equinix Q4 2016 report, Bloomberg.com
Market cap. USD 27,3bn
performance in 2016 with recurring revenues of USD ~3,4bn, up 33% compared to the prior year.
USD ~1,7bn, up 30% compared with the prior year. This is equivalent to an adjusted EBITDA margin of 48%.
Equinix achieved annual revenues and EBITDA CAGR of ~13%.
Poor rating, and has had a positive rating development, with a stable
~14% CAGR ~13% CAGR
50 100 150 200 250 300 350 400 450 01.12.2006 01.05.2007 01.10.2007 01.03.2008 01.08.2008 01.01.2009 01.06.2009 01.11.2009 01.04.2010 01.09.2010 01.02.2011 01.07.2011 01.12.2011 01.05.2012 01.10.2012 01.03.2013 01.08.2013 01.01.2014 01.06.2014 01.11.2014 01.04.2015 01.09.2015 01.02.2016 01.07.2016
Share price development in USD - 2006-2016
Revenue development in USD millions Adjusted EBITDA development in USD millions Debt obligations maturity profile in USD millions Share price development in USD
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Source: Catella Project Nuvola teaser and market overview, Niam Information *WAULT=Weighted average unexpired lease term
Rent-roll Comments
23,500 sqm. Equinix is obligated to rent the entire Property until 31.12.2039.
take over their premises and pay a rent equal to Equinix passing rent.
This implies that their renegotiated rent level at SEK ~1,000 per sqm includes a compensation for their obligation to take over any vacant premises at their passing rent and the premises in it's actual condition (i.e. no capex requirements for the property owner).
Property prior to facade upgrade
Tenants / Users Total (sqm) Total rent (in millions) Rent per sqm CPI Expiry date Option WAULT* Equinix Telecity 16,105 16.4 1,013 100 % 31.12.2039 5 years 23 Equinix Telecity / Telenor 2,881 2.9 1,013 100 % 31.12.2039
Equinix Telecity / National Museum / Other 4,514 4.5 1,013 100 % 31.12.2039
Total 23,500 23.8 1,013 23 Area Rental income Terms
Rent and cost overview SEK in thousands SEK per sqm Base rent 23,800 1,013 Total rent 23,800 1,013 Costs Maintenance 625 27 Insurance 75 3 Property related expenses 700 30 Audit and accounting fees 150 6 Nordic trustee fee 200 9 Administrative- and technical fees 350 15 Administrative fees 700 30 Total costs 1,400 60 EBITDA 22,400 953
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Key facts in the lease agreement with Equinix
installations and operations inside their leased premises.
technical installations (except installations located in Equinix premises) as well as insurance.
Residential unit section.
National Museum, the maintenance will therefor mainly be related to the elevators.
in the cash flow, in addition to the annual running costs.
guarantee from the European parent company, which provide a security that Equinix is to fulfil its obligation in accordance with the lease agreement until expiry an 31.12.2039.
Net operating income
Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
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Equinix generic data center
Address Mariehällsvägen 40-44, Bromma (greater Stockholm area) Property reg.name Vandenbergh 9 Property history Originally built as a multi purpose building in 1974 Tenant Equinix Telecity Group Scandinavia AB (has been a tenant since 1999) Gross 2017 rent SEK 23.8m Contract structure Standard Net yield 4.8% Gross area ~23,500 sqm Price per sqm SEK ~20,400 Parking spaces ~160 indoor spaces Plot size ~11,500 freehold plot Target company Niam V Sic AB, org.no. 556660-5597 Rent per sqm SEK 1,013 Annual CPI-adj. 100% Expiry date 31.12.2039 Options 5 years at same conditions Vendor Niam V Top Sic Holding Building structure The building is constructed in concrete, while the facade is covered with profiled aluminum plates.
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Source: Catella Project Nuvola teaser, Niam Information
municipality by area, yet it has ~46,100 inhabitants as of 31.12.2015. The municipality has the second highest population density in Sweden.
inner city of Stockholm by subway, commute trains and buses.
due to its strong population growth and massive residential development.
underground, which will release an area of ~30,000 sqm, creating a new city center.
2030 by 6,700 units, implying that a total of 18,700 new residential units will be constructed in the municipality during the next 14 years.
capita in Sweden, SEK ~38,600 per capita, compared to the national average of SEK ~48,800 per capita.
was ranked 29 out of 280 municipalities in terms of business climate. The largest public employer in Sundbyberg is the municipality with ~2,600 employees and the largest private employer is Swedbank with ~2,200 employees.
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Sundbyberg municipality
Sources: www.sundbyberg.se
~46,100 inhabitants ~25% population growth to 2020 6 train and subway stations Bromma Airport Bromma Airport Friends Arena Tomteboda
2 1 3 1 2 3
The Property
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The sectioning of Vandenbergh 9
The sectioning Niam (the Vendor) has applied for a sectioning of Vandenbergh 9, which implies that Vandenbergh 9 will be divided into two sections;
The old office areas will be demolished and replaced with modern and attractive residential units. Niam has applied for the construction of ~250 residential units over six floors, which will be situated above the Property and as townhouses at the end of the building. Upgrade of the facade In relation to the construction of the Residential Unit, the outdoor areas and the facade of Vandenbergh 9 will be upgraded and restored to get a modern and attractive exterior (excl. windows). As part of the residential project, Niam will establish a café / restaurant and a pre school in Vandenbergh 9. Niam's responsibility Niam carries the full responsibility for the sectioning of Vandenbergh 9 and the future residential development. Both the new owner of the Property and the tenant will be fully indemnified in relation to both processes. SPA guarantees Niam will issue an indemnity guarantee in connection with the transaction, covering both any possible risk of loss of rent due to the construction and the sectioning process.
Vandenbergh 9
The Residential unit The Property
Source: Catella Project Nuvola teaser, Niam information
In the unlikely event that the Residential unit construction project has not been legally approved as of 31. December 2019, the buyer of the Property and Niam shall first negotiate for commercial solution up to 15 February 2020. If the parties have not reached an agreement by then, Niam can choose between one of the two following solutions: Solution 1: Vandenbergh 9 (the Property and the Residential Unit) should enter into a sales process. In the event of a sale, the price allocation between the parties shall be agreed upon by two independent and reputable valuation firms where each party appoints its own. The Property (excluding the Residential unit) should not be assigned a value less than SEK 540m. This minimum transaction value is guaranteed by Niam. Solution 2: Niam can require that the buyer of the Property is obligated to pay an additional purchase price for the existing office building (the Residential Unit) which has not been demolished, equivalent to 60 percent of the market value for this unit (determined based on the average of two valuations carried out by independent and reputable valuation firms where each party appoints its own). However, Niam has to provide the buyer a 5-years vendor loan corresponding to the additional purchase
annually on principal loan amount.
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Source: Catella Project Nuvola teaser, Niam information
Apr'16-Dec'16 Dec'16-H2,17 H2'17 After approval
Plan meetings
H2'17-2019 2019->
Admitted development plan Legally binding development plan Pre construction process Construction of residential units Hand over of residential units
Niam has since April had several planning meetings with architects, technical consultants, the municipality etc. in relation to the sectioning and development of Vandenbergh 9 The development plan is to be sent to various public departments for more thorough discussions and adjustments. Niam estimates that a legally binding zoning plan will be approved during the 2nd half of 2017. Niam will enter into an agreement with a leading development and construction company. The construction process is estimated to be initiated during the 2nd half of 2017. Due to the sophisticated nature of the technical equipment in the Property, it is estimated that this process will take somewhat longer time due to a more sensitive construction process. When the construction process is finished, the residential units will be handed over to the designated owners.
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Equinix generic data center
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Connection to multiple Power grids Dark fiber crossing point Central location in Stockholm
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Source: Catella Project Nuvola conversion calculation & market overview * Estimates stated by the Swedish broker Catella
Since Equinix is obligated to pay rent and cover costs related to all areas of the Property when premises become vacant, the contractual rent has been adjusted to SEK 1,013 per sqm, implying SEK ~300* lower than the average market per sqm rent for this type of premises in the area. As such, if the Property had been fully let at market rent the Property value of SEK 480m would imply a net yield of 6.2%. This significantly reduces the residual value risk at contract expiry.
NOI calculation of conversion Area TSEK SEK/sq.m. Storage / warehouse rent 20,705 26,917 1,300 Garage rent 3,244 2,304 710 Rental income 23,949 29,221 1,220 Storage / warehouse cost 20,705
Garage cost 3,244
Total costs 23,949
Net operating income 23,949 28,877 1,206 Residential conversion case Area TSEK SEK/sq.m. Conversion costs, SEK/sq.m. 4,423
Loans in tenant-owners associations, SEK/sq.m. 44,230 10,000 Sales price of residential areas, SEK/sq.m. 309,610 70,000 Profit/loss, residential 4,423 221,150 50,000 Valuation NOI, storage/warehouse and garage 23,949 28,877 1,206 Yield assumption, storage/warehouse 6.50 % Valuation storage / warehouse and garage 23,949 444,269 18,551 CapEx, storage / wareshous plus new floors 20,705
4,000 Total value after conversion 23,949 582,599 24,327 Assumptions Area Existing lettable area 23,500 Additional area after reconstruction of open floors 5,670 Total area after reconstruction 29,170 Alternative use Possible residential area 4,423 Possible storage/warehouse area 20,705 Garage area 4,042 Garage for residential 798 Garage area 3244 Development of residential areas Conversion costs, SEK/sq.m. 30,000 Loans in tenant-owners associations, SEK/sq.m. 10,000 Sales price of residential areas, SEK/sq.m. 70,000 Garage Number of parking spaces 160 Number of parking spaces for new residentials 32 Number of parking spaces available to let 128 Rent per parking space, SEK/year 18,000 Storage / warehouse area Storage / warehouse area after reconstruction 20,705 Storage / warehouse rent, SEK/sq.m. 1,300 CapEx storage / warehouse, SEK/sq.m. 4,000 Assumptions
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Source: Catella Project Nuvola conversion calculation & market overview
Market rent of storage/ warehouse is
300 per sqm higher than the passing rent in the building
Note that desktop estimates as described above are only rough estimates and the actual outcome may differ materially.
Estimates based on floor plans Based on figures from Catella and market knowledge Low rent and potential alternative use provide a solid down-side protection.
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Equinix generic data center
723 657 602 556 516 482 361 289 241 181 10.2 % 9.5 % 9.1 % 8.8 % 8.5 % 7.3 % 7.0 % 7.0 % 7.0 % 0% 2% 4% 6% 8% 10% 100 200 300 400 500 600 700 800 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 10.00% 12.50% 15.00% 20.00% IRR% SEK in millions
IRR sensitivitet: Exit-yield/brutto eiendomsverdi i 2041
Gross real estate value in 2040 IRR p.a.
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IRR sensitivity – Exit yield/gross real estate value in 2040
Debt SEK 312m
Property illustration
Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 Percentage SEK 10Y swap Stockholm annual prime yield (Catella
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Source: Catella, Bloomberg
Yield gap – Stockholm prime office
%
4.51% 4.37% 4.04% 3.80% 3.40%
Yield gap 2.15%
4.18%
Indicative capital structure
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Issuer Data Center Invest 2 AB Financing Senior secured bond Issue volume SEK 312m LTV% 65% Tenor 10 years Coupon Fixed rate equivalent to 8Y SEK Swap + 200bps, year nine and ten 3M Stibor + 200 bps. Amortisation Non Financial covenants The Issuer shall at all times procure that:
(i)
LTV<[75]% hard covenant, and LTV<[70]% soft covenant
(ii)
The Interest Coverage Ratio is at least [1.5]x
Indicative bond financing terms
0% 10% 20% 30% 40% 50% 60% 70% 80% 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Loan to value at 4%, 4,5% and 5% yield
LTV@ 4.0% yield LTV@ 4.5% yield LTV@ 5.0% yield LTV covenant <70% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Interest coverage ratio development
ICR (interest coverage ratio) Covenant ICR>1.5
ICR LTV at 4%, 4,5% and 5% yield
Property prior to facade upgrade
Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
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Source: http://www.riksbank.se/Documents/Rapporter/PPR/2017/170215/dat_ppr_170215_H09e88lkj_sv.xlsx Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
Estimated cash flow SEK in thousands 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
Rental income 17,850 24,228 24,834 25,554 26,065 26,587 27,118 27,661 28,214 28,778 29,354 29,941 30,540 31,151 31,774 32,409 33,057 33,718 34,393 35,081 35,782 36,498 37,228 Capex
Insurance
Net operating income 17,325 23,516 24,104 23,303 25,299 25,805 26,321 26,847 25,384 27,932 28,491 29,060 29,642 28,234 30,839 31,456 32,085 32,727 33,381 34,049 34,730 35,424 36,133 Adm, audit, accounting and Nordic Trustee fees
EBITDA 16,800 22,803 23,373 22,551 24,532 25,023 25,523 26,034 24,554 27,085 27,627 28,180 28,743 27,318 29,905 30,503 31,113 31,735 32,370 33,017 33,677 34,351 35,038 Interests
Cash flow pre tax 12,359 13,946 14,516 13,669 15,675 16,165 16,666 17,152 15,697 18,228 18,770 19,298 19,886 18,461 21,047 21,621 22,255 22,878 23,512 24,135 24,820 25,494 26,181 Tax
Cash flow after tax 12,359 13,946 14,516 11,750 13,847 13,852 14,201 14,535 12,933 15,746 15,694 16,068 16,455 14,868 17,736 17,711 18,190 18,645 19,117 19,575 20,098 20,597 21,113 Opening balance cash 483,968 17,359 17,555 18,321 16,171 15,969 15,620 15,471 15,506 13,789 14,735 15,379 16,197 17,202 16,420 18,306 19,017 19,708 20,353 20,970 21,544 22,142 22,739 Dividends
Transaction costs
Purchase of the Property
Closing balance cash 17,359 17,555 18,321 16,171 15,969 15,620 15,471 15,506 13,789 14,735 15,379 16,197 17,202 16,420 18,306 19,017 19,708 20,353 20,970 21,544 22,142 22,739 23,353 KPIs ICR (interest coverage ratio) 3.78 2.57 2.64 2.54 2.77 2.83 2.88 2.93 2.77 3.06 3.12 3.17 3.25 3.08 3.38 3.43 3.51 3.58 3.65 3.72 3.80 3.88 3.96 ICR equal to 1,5x 4.8 % 4.9 % 5.0 % 4.8 % 5.2 % 5.3 % 5.5 % 5.6 % 5.2 % 5.8 % 5.9 % 6.0 % 6.1 % 5.8 % 6.4 % 6.5 % 6.6 % 6.8 % 6.9 % 7.1 % 7.2 % 7.3 % 7.5 % DCR (debt coverage ratio) 3.8 2.6 2.6 2.5 2.8 2.8 2.9 2.9 2.8 3.1 3.1 3.2 3.2 3.1 3.4 3.4 3.5 3.6 3.7 3.7 3.8 3.9 4.0 LTV (at gross purchase price) 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % 65.0 % Annual dividend 0.0 % 8.0 % 8.0 % 8.1 % 8.2 % 8.3 % 8.3 % 8.4 % 8.5 % 8.6 % 8.8 % 8.9 % 9.0 % 9.1 % 9.2 % 9.9 % 10.2 % 10.5 % 10.8 % 11.0 % 11.3 % 11.6 % 11.9 % Accumulated dividend
27,500 41,400 55,450 69,650 84,000 98,500 113,150 127,950 143,000 158,250 173,700 189,350 205,200 222,200 239,700 257,700 276,200 295,200 314,700 334,700 355,200 Assumptions
Annual CPI-adjustments
1.8 % 2.5 % 2.9 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 % 2.0 %
Tax rate
22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 % 22 %
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Note that the figures in the presentation are based on all available information, and believed to be correct at the date of mailing of the presentation. Carnegie cannot guarantee the accuracy of the calculations or the quality of the figures that the calculations are based upon. Carnegie reserves that forecasts cannot be used as a reliable indicator of future returns and that the expected return is not a guarantee of actual return.
Estimated Profit and loss SEK in thousands 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039
Rent 17,850 24,228 24,834 25,554 26,065 26,587 27,118 27,661 28,214 28,778 29,354 29,941 30,540 31,151 31,774 32,409 33,057 33,718 34,393 35,081 35,782 36,498 37,228 Transaction costs
Net operating income 4,635 23,516 24,104 24,803 25,299 25,805 26,321 26,847 27,384 27,932 28,491 29,060 29,642 30,234 30,839 31,456 32,085 32,727 33,381 34,049 34,730 35,424 36,133 Capex
EBITDA 4,110 22,803 23,373 22,551 24,532 25,023 25,523 26,034 24,554 27,085 27,627 28,180 28,743 27,318 29,905 30,503 31,113 31,735 32,370 33,017 33,677 34,351 35,038 Tax depreciations
EBIT
17,004 17,797 17,189 19,375 20,063 20,752 21,444 20,139 22,838 23,540 24,478 25,190 23,907 26,629 27,359 28,094 28,837 29,588 30,347 31,114 31,890 32,675 Net financials
Result pre tax
8,147 8,940 8,307 10,518 11,205 11,895 12,563 11,282 13,980 14,683 15,596 16,332 15,049 17,772 18,477 19,237 19,980 20,731 21,465 22,256 23,032 23,818 Tax depreciations 1,840
Annual result
6,355 6,973 6,479 8,204 8,740 9,278 9,799 8,800 10,905 11,453 12,165 12,739 11,738 13,862 14,412 15,005 15,584 16,170 16,743 17,360 17,965 18,578
Estimated Balance sheet
Akkumulert årsresultat
6,804 13,284 21,487 30,227 39,505 49,304 58,104 69,009 80,461 92,627 105,366 117,104 130,966
SEK in thousands OB 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021 31.12.2022 31.12.2023 31.12.2024 31.12.2025 31.12.2026 31.12.2027 31.12.2028 31.12.2029 31.12.2030 31.12.2031 31.12.2032 31.12.2033 31.12.2034 31.12.2035 31.12.2036 31.12.2037 31.12.2038 31.12.2039 Property and technical instalations 145,000 139,200 133,632 128,287 123,155 118,229 113,500 108,960 104,601 100,417 96,401 92,545 88,843 85,289 81,878 78,603 75,458 72,440 69,542 66,761 64,090 61,527 59,066 56,703 Goodwill and land 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 318,968 Tax losses carry forward
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2,079 1,848 1,617 1,386 1,155 924 693 462 231
20,000 17,359 17,555 18,321 16,171 15,969 15,620 15,471 15,506 13,789 14,735 15,379 16,197 17,202 16,420 18,306 19,017 19,708 20,353 20,970 21,544 22,142 22,739 23,353 Total assets 483,968 479,677 472,281 467,423 459,911 454,551 449,243 444,322 439,768 433,636 430,335 426,892 424,008 421,459 417,265 415,876 413,443 411,115 408,863 406,698 404,602 402,636 400,772 399,023 Equity 171,967 151,693 144,298 137,371 129,800 123,804 118,194 112,972 108,121 102,121 97,976 94,178 90,893 87,982 83,871 80,733 77,645 74,650 71,734 68,904 66,147 63,507 60,972 58,550 Debt 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 312,001 Accrued interests
2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 2,233 Tax payable
1,828 2,314 2,465 2,617 2,764 2,482 3,076 3,230 3,431 3,593 3,311 3,910 4,065 4,232 4,396 4,561 4,722 4,896 5,067 5,240 Dividend
13,750 13,900 14,050 14,200 14,350 14,500 14,650 14,800 15,050 15,250 15,450 15,650 15,850 17,000 17,500 18,000 18,500 19,000 19,500 20,000 20,500 21,000 Total debt 312,001 327,983 327,983 330,052 330,111 330,747 331,048 331,350 331,647 331,515 332,359 332,713 333,114 333,476 333,394 335,143 335,798 336,465 337,129 337,794 338,456 339,130 339,800 340,473 Total equity and debt 483,968 479,677 472,281 467,423 459,911 454,551 449,243 444,322 439,768 433,636 430,335 426,892 424,008 421,459 417,265 415,876 413,443 411,115 408,863 406,698 404,602 402,636 400,772 399,023
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Equinix generic data center
Investor Data Center Invest 2 AB About the transaction Indicative transaction structure
33
Data Center Invest 1 AB
enter into an agreement to acquire all shares in Niam V Sic AB (real estate company), which currently owns 100% of Vandenbergh 9 (to be divided into two sections).
established to own the shares in Data Center Invest 2 AB, and will be capitalized prior to the planned transaction.
financed through a share issue of SEK ~172m, while the remaining SEK ~312m will comprise debt, which will be financed through a senior secured bond.
satisfactory equity and debt financing is achieved, and that the due diligence of the Property and the real estate company is proven satisfactory.
transaction.
Real estate company (NiamV Sic AB) [Bond issuer]
Pledge in Property
Fee structure
(Data Center Invest 1 AB), and responsible for structuring and sourcing the necessary equity and debt financing to purchase the Property.
Norway and Carnegie Sweden.
process, completion of the transaction, debt financing and capitalization of the company etc. 34
SEK in thousands (excl. VAT) Amount In % of gross real estate price Party entitle to the fee Arrangement- and distribution fee 9,600 ~2,0 % Carnegie Legal DD 800 ~0,17 % Wigge & Partners Advokat Technical DD 150 ~0,03 % WSP Tax and VAT DD 400 ~0,1 % Svalner Swedish mortgage deeds "pantbrev" 1,150 ~0,24 % Swedish government Bond structuring 2,900 ~0,9 % Carnegie Sum 15,000 3,1 %
Board of directors
under Swedish law, which include, but is not limited to, the overall management and control of the company.
shareholder representatives.
investors will vote for on the General Assembly. The nominees will be nominated based on ownership percentage, experience from similar positions and general real estate experience.
Statutes and sales trigger
the Property is offered for sale. If less than 50% of the shareholders agree to the proposed sales process, the majority shareholders (i.e. >50%) must acquire the minority shareholders' stakes. For more information please contact Carnegie.
Subscription information Subscription details
Company using the subscription form, which is attached to the
through the subscription form during the subscription period. The arranger / manager will complete the transaction on behalf of the investors that signed the subscription form.
31 March at 15:00.
period at any time.
satisfactory equity and debt financing.
debt financing terms etc.
are described in the subscription form. 35
SEK Amount Property value 480,000,000 Estimated equity amount ~172,000,000 Number of shares 1,720,000 Price per share ~100 Minimum subscription 10,000 shares Subscription period 8 March 2017 – 31 March 2017 Estimated payment date [Primo April] Estimated closing [Mid April]
Business management
with Carnegie.
Company / real estate company, including;
in line with the Company's best interest.
yearly and quarterly financial investor reports.
their rights and obligations under the agreement to another company in the same group as Carnegie.
excluding VAT. The remuneration will be CPI-adjusted annually with 100% of the changes in annual CPI. Carnegie will in addition receive a startup fee of SEK 50 000.
provided that at least 90% of shares vote for this.
request.
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Mandate agreement
will be the Company's financial advisor, including but not limited to, evaluating the capital structure, obtaining debt financing, refinancing of debt and sale of the real estate company and / or the Property.
company with the services covered by the agreement.
conditions for such assistance, and to market remuneration agreed between the parties.
directly or indirectly, Carnegie is entitled to an exit fee of 0.75% of the gross property value at the time of sale. The exit fee is conditional on an
should be subject to negotiation.
terminated by either the Company or Carnegie. Termination of the contract requires approval of the General assembly of the Company with 90% of shares voting for this. Notice shall be given in writing with 12 months warning. Termination of realization fee is not possible.
Overall risk Investors should be aware that investments (both direct and indirect through the Company) in real estate is associated with an inherent risk. Economic development in the Company and the risks associated with the Company's business are important when making an investment decision. The arranger cannot guarantee that the Company's financial goals are achieved, nor that the investment will generate a positive return for
impact on the value development of the investment. The order of the various risk factors presented in the following pages are not intended to provide an indication of the probability of their occurrence or of their relative importance. Tenant risk The property is leased to multiple tenants, however Equinix can be viewed as the sole tenant as explained in this Presentation. The tenant's ability to pay the agreed lease may be impeded due to events that are
description of the tenants, please refer to information in this Presentation. Upon expiration of the lease agreement it is considered likely that the premises must undergo renovations before it can be leased to a new
lower or no income, which will affect the Company's financial situation negatively. Market risk Returns from property investment will mainly depend on the rental income generated from the property, costs associated with repairs and running maintenance, administrative expenses and changes in market value. Rental income and the market value of the property is generally influenced by the overall condition of the economy, such as growth in GDP, employment trends, inflation and changes in interest rates. Residual value There is a significant risk associated with the residual value of the property and property-related assets, as each property is unique. This can result in significant uncertainty regarding market liquidity and pricing of property on a possible date of sale. There is no assurance that the estimates set forth in this investor presentation will reflect the actual residual value when the Property is divested. A decline in the property market will have a negative impact on property value. Changes in legislation and regulatory framework Changes in laws relating to ownership of property and land can have a negative effect on the value of the shares. New laws may be introduced retroactively that can affect real estate and land use. Governments at all levels are actively involved in the publication and enforcement of regulations related to taxation, land use and zoning, restrictions, environmental protection and safety and other matters. The introduction of such regulations or rules could lead to increased costs and reduced income, which can affect both the return and value of the property adversely. Public authorities may exercise their rights of expropriation of property if the conditions for expropriation are met. Any expropriation will give the company the right to compensation, but the company's financial condition may independently of such a compensation be adversely affected. The Company may incur increased costs for investors as a result of a revised legal assessment of the property or the investment in this. Operating expenses The property owner is responsible for outside maintenance, service and maintenance of technical installations as well as insurance. Due diligence This investor presentation is based on information received from the seller, and the seller's representatives. The arranger has not sought to verify the accuracy or completeness of this information. When the arranger has been provided with the necessary financing for a possible completion of the transaction there will be performed a legal, technical and financial due diligence of the information received. Costs related to due diligence will be charged the Company. During the due diligence process, it may be discovered conditions that differ from the presentation, including factors that could lead to increased costs or reduced revenues for
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Liquidity The liquidity of unlisted shares is normally low and can be very limited for smaller companies. Shareholders can therefore not expect to sell their shares at the desired time and price. An investment in the Company suggests that the investor has a long-term investment perspective. A sale of shares in the 2nd hand market will normally require that the investor is willing to sell the shares at a discounted price. Additional need of capital The Company may be require additional capital and financing. Future capital requirements could result in a new equity issues in the company, with the associated risk of dilution of shareholders who are not able or willing to participate in new issues Financial risk Borrowing costs are a significant part of the costs in real estate projects with external financing. The long-term debts of the company are planned to consist of bond loan with senior security in the property. The interest costs alone will account for a large proportion of the Company's expenses. The risk of higher interest costs and the possibilities for changing the loan terms when the bond financing expires is a very important risk factor for real estate investments. Higher loan ratio means increased risk. Upon expiration of the bond financing there will be a risk related to the interest rate which may affect future returns for the owner of the property. Currency risk The Property company's rental income and expenses are in SEK. The investment in the Company is made in either NOK or SEK. There is a risk that fluctuations in the exchange rate between NOK and SEK will lead to deviations between the Property company's profitability and the Company's profitability and thus that the return on the investment may be lower than expected even though the Property company achieves its estimated budget. Investors can reduce the NOK/SEK risk by using different foreign exchange instruments. The Company will not enter into NOK/SEK hedging arrangements. Alternative Investment Fund Manager Directive The EU Directive 2011/61 / EC (Alternative Investment Fund Managers Directive) intends to ensure that alternative investment funds ( "AIF") are subject to a uniform regulation, including licensing requirements for fund manager. AIFM Act's broad wording could include this type of direct investment in real estate which the Company intends to implement. Being that neither the legislatures or the authorities has given clear guidelines about structures that company is be covered by this law or not, Carnegie has looked into the question at its best effort. Whether or not the Company is covered by the AIFMD, will depend on an overall judgment in which several factors are relevant. In the present case, it is the Company's main purpose to operate the property and ensure ongoing, annual earnings. In addition, investors have direct influence over the Company's daily operations through representation on the board and the general assembly. Based on the general guidelines of the EU regulatory agency (ESMA), the assessment is that the Company is not covered by the AIFMD. The Company will therefore not apply for license or authorisation for the marketing of shares. In the event that the Financial Supervisory Authority or the courts should reach the opposite conclusion of the Company, it will cause the Company to appoint an authorized custodian of an Alternative Investment Fund, and trigger special rules regarding the organization, risk management, reporting, remuneration and rules
AIFMD and the contents of this, please consult with Carnegie. Tax risks and changes in applicable tax laws and regulations The Company and its subsidiaries operations are affected by the tax rules in force from time to time in Sweden. These rules include corporate tax, real estate tax, value added tax, rules regarding tax-free disposals of shares, other governmental or municipal taxes and interest deductions and subsidies. Future changes in applicable laws, regulations or administrative practice may affect the conditions of the business of the Company and its subsidiaries.In 2014, a parliamentary committee proposed changes to the interest deduction limitation rules. The current Government in 2015 announced that the proposal will be revised. A new proposal is currently being prepared and new rules could potentially be enacted already in 2017. Further, the Swedish interest limitation rules will be affected by the Anti-Tax Avoidance Directive (2016/1164) which was adopted in June 2016 and must be implemented in Swedish law before 1 January 2019. Further, in 2015, the Swedish Government assigned a committee to investigate if it is necessary to introduce new rules on limitations on tax-exempt disposals of shares in companies holding properties and, if considered necessary, to propose new legislation. Stamp duty liability in respect of such indirect real estate transactions as well as property parceling procedures (Sw: fastighetsbildningsåtgärder) will also be subject to the committee´s review. The results of the review are to be presented in March 2017 at the latest. If any of the above described risks materialise, it could have a material negative impact on the business of the Company and its subsidiaries.
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Introduction The following section is a short summary of certain important Swedish tax matters and principles that may be or become relevant with respect to the Company and the holding of shares in the Company. This section does not purport to be a complete summary of tax law and practice currently applicable in Sweden and is subject to further limitations as described below. The following summary is based on laws, regulations and practice currently applicable in Sweden at the date of this Presentation. Taxation of the Company and its subsidiaries Under present tax law the Company and its subsidiaries including the Property company, being Swedish limited liability companies (Sw. aktiebolag) is subject to 22 percent corporate taxation. Capital gains and dividends received by a Swedish limited liability company on unlisted shares are normally tax exempt under the rules for business-related shares (Sw. näringsbetingade andelar) provided that the shares are not held as current assets. Consequently, under current rules, there will normally not be any taxation of dividends distributed from the Property company or at an exit structured as a sale of shares. Interest on debt is normally tax deductible under the assumption that the creditor is not considered affiliated with the debtor (Sw. intressegemenskap). Companies are considered affiliated if one of the companies (i) through ownership or otherwise, is deemed to have a substantial influence (Sw. väsentligt inflytande) over the other company or (ii) if the companies are considered to be under common control (Sw. under i huvudsak gemensam ledning). If the companies are considered affiliated, interest on loans is only tax deductible if certain other tests are met. The registered owner of a property (at the beginning of each calendar year) is liable to pay property tax. The property tax assessment is based on the usage and character of the property by the beginning of the assessment year. The property tax assessment value should in general be equivalent to approx. 75 percent of the market value. The Property held by the Property company is taxed as an industrial unit and is subject to 0,5 percent property tax annually based on the tax assessment value. Property tax is deductible for tax purposes. A property is for tax purposes categorized into land, land improvements (Sw: markanläggningar), land equipment (Sw: markinventarier), building and building equipment (Sw: byggnadsinventarier). The categorization into different types of assets for tax purposes is of importance with regard to e.g. the possibility of making depreciations for tax purposes. The cost for acquiring or developing buildings should be depreciated for tax purposes with 2-5 percent annually depending on the use of the building. Acquisition costs for building - and land equipment are normally subject to an annual depreciation rate of 20 - 30 percent and for land improvements with an annual rate of 5-10 percent. Costs for repairs- and maintenance on a building may be subject to immediate deduction for tax purposes if certain conditions are met (even if the costs are activated in the books). The building held by the Property company is depreciated with an annual rate of 4 percent. Under Swedish tax law, Swedish group companies can tax consolidate by openly offset taxable profits in one company against tax losses in another company through group contributions, provided that certain requirements are met. Group contributions are taxable for the receiving company and tax deductible for the distributing company. It is expected that full group contribution capabilities should exist within the group the year following after the year of the acquisition of the Property company. Taxation of shareholders in the Company The following summary of certain tax issues that may arise as a result of holding or disposing the shares in the Company is intended only as general information for investors, who are resident or domiciled in Sweden for tax purposes, if not otherwise stated. The summary does not deal comprehensively with all tax consequences that may occur in this context. For instance, it does not cover for example: (i) the specific rules that, in certain cases apply to shares in a closely held company (Sw: fåmansföretag), (ii) the rules that apply where shares are held by a partnership or held as current assets in a business operation (iii) via a capital insurance (Sw: kapitalförsäkring) or investment deposit account (Sw:investeringssparkonto). Special tax consequences that are not described below may also apply for certain categories of taxpayers. Investors are advised to consult their own tax advisors concerning the overall tax consequences of their ownership of shares, including the applicability and effect of foreign income tax rules, provisions contained in double taxation treaties and other rules, which may be applicable.
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General Different tax rules apply for listed and unlisted shares. Shares are considered listed if: (i) they are subject to public trading on a regulated market or (ii) an equivalent market outside the European Economic Area, or (iii) if the shares are subject to continuous publicly available listing on the basis of marketable trade in the shares. Shareholders who dispose of their shares in the Company will be subjected to capital gains taxation. The capital gain or capital loss is calculated as the difference between the sales proceeds, after deduction for sales costs, and the acquisition cost for tax purposes. The acquisition cost is calculated according to the so called average method (Sw. genomsnittsmetoden). This means that the acquisition cost for all shares of the same type and class are added together and calculated collectively, with respect to changes to the holding. For listed shares the acquisition cost may, as an alternative, be determined as 20 percent of the net sale revenue under the so called standard rule (Sw. schablonmetoden). Individuals Individuals tax resident in Sweden are taxed on all capital income, including capital gains and dividends received on listed and unlisted shares, as capital income. The tax rate is 30 percent. For individuals, capital gains and dividends on unlisted shares are, as a general rule, only taxable to five sixths. The tax rate is therefore in effect 25 percent. Capital losses on listed shares are fully deductible against taxable capital gains on shares during the same fiscal year. The loss is also deductible against taxable gains on other listed securities that are taxed in the same manner as shares (except for shares in mutual funds containing only Swedish receivables (Sw. räntefonder)). Capital losses on unlisted shares are only deductible to five sixths. To the extent capital losses cannot be set off against gains, 70% of the deductible capital losses are deductible from other capital income. If a deficit arises in the income from capital category, a reduction of the tax on income from employment and from business activities, as well as the real estate tax and the municipal real estate fee, is allowed. The tax reduction amounts to 30 percent of any deficit not exceeding SEK 100,000 and 21 percent of any deficit in excess of SEK 100,000. Deficits may not be carried forward to a subsequent fiscal year. For individuals tax resident in Sweden preliminary tax is withheld with 30 percent on dividends. The preliminary tax is normally withheld by Euroclear Sweden or by the nominee in relation to nominee registered shares with respect to public companies (Sw. avstämningsbolag) or by the company declaring the dividend with respect to private companies (Sw. kupongbolag). Swedish limited liability companies Swedish limited liability companies are taxed on all income, including capital income, as income from business activities at a flat rate of 22 percent. However, dividend and capital gains attributable to so called business-related shares are tax exempt. Correspondingly, a capital loss is not tax deductible for the shareholder. Shares are considered business-related if the shares are not held as current assets and if any of the following conditions is satisfied: 1. The shares are unlisted; 2. The shares are listed and the holder owns at least 10 percent of the voting power of the company for more than 12 months; or 3. If the holding otherwise is necessary for the business conducted by the holder or any of its affiliates. With regard to 2. above, the shares must, however, not have been held continuously for one year at the date of a dividend distribution. Taxation will, however, be triggered if the shares are sold (or otherwise ceases to be entitled to the tax exemption) before the 12 months holding period requirement is met.
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A deductible capital loss on shares not covered by the exemption for business related shares may for tax purposes only be offset against taxable gains on shares or other securities that are taxed in the same manner as shares. Such capital losses may also, under certain circumstances, be offset against capital gains on such securities within the same group of companies, provided the requirements for group contributions (tax consolidation) are met. Tax deductible capital losses on shares or other securities that are taxed in the same manner as shares, which have not been deducted from capital gains within a certain year may for tax purposes be carried forward and be offset against such capital gains in the future without any limitation in time. Net Wealth Tax and Inheritance Tax There is no wealth tax or inheritance tax in Sweden Shareholders resident outside of Sweden For shareholders not resident in Sweden for tax purposes, and that do not conduct business from a permanent establishment in Sweden to which the shares may be attributed, who receive dividends on shares in a Swedish limited liability company, such as the Company, Swedish withholding tax is normally withheld. The tax rate is 30 percent. The tax rate is generally reduced through tax treaties for the avoidance of double
tax rate is reduced to 0 percent for companies possessing shares representing at least 10 percent of the capital of the company declaring the dividend if certain other requirements are met. Further, under Swedish domestic law, dividends paid to a foreign company that is equivalent to a Swedish company are exempt from withholding tax if the shares are held for business purposes, see above “ Swedish limited liability companies”. For example, dividends paid by an unlisted company to corporate shareholders resident in Norway for tax purposes is generally not subject to withholding tax. For corporate shareholders resident and domiciled in the European Economic Area (EEA), withholding tax is normally not levied if the shareholder holds more than 10 percent or more of the capital in the company declaring the dividend if certain other requirements are met. The preliminary tax is normally withheld by Euroclear Sweden or by the nominee in relation to nominee registered shares with respect to public companies (Sw. avstämningsbolag) or by the company declaring the dividend with respect to private companies (Sw. kupongbolag). Tax is withheld provided that necessary information is made available in relation to the person entitled to such dividends. If such information is not made available, and tax is not levied, the person entitled to such dividends may be taxed retroactively. If a 30 percent withholding tax is deducted from a payment to a person entitled to be taxed at a lower rate, or in the event that too much tax has otherwise been withheld, a refund can be claimed from the Swedish Tax Agency (Sw. Skatteverket) prior to the expiry of the fifth calendar year following the dividend distribution. Individual shareholders not resident or domiciled in Sweden are normally not taxed in Sweden on a disposal of shares. Shareholders may however be subject to tax in the country of residence. In accordance with a specific rule, so called ten-year-rule, an individual shareholder who are not resident or domiciled in Sweden may, under certain circumstances, be subject to Swedish tax on capital gains from a sale of shares, if they have been resident or permanently lived in Sweden at any time during the calendar year of such sale or during any of the ten preceding calendar years. The applicability of this rules may, however, in many cases be limited under tax treaties that Sweden has entered into with other countries. Corporate shareholders are normally not subject to tax on disposal of shares unless the shares are attributable to a permanent establishment in Sweden.
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Taxation of dividends Norwegian Personal Shareholders Dividends received by shareholders who are individuals resident in Norway for tax purposes (“Norwegian Personal Shareholders”) are taxable as ordinary income in Norway, adjusted with a factor of 1.15. Ordinary income is taxable at a rate of 25%, giving an effective tax rate of 28.75% (25% x 1.15). However, this will only apply to dividends exceeding a calculated risk-free return on the investment (tax-free return), which itself is tax exempt. The Government has suggested that the tax rate will be reduced to 24% in 2017, and the adjustment factor will therefore be increased to 1.24. The tax free allowance is calculated annually on a share-by-share basis and pertains to the owner of the share at the expiration of the relevant calendar year. Norwegian Personal Shareholders who transfer shares within a year will thus not be entitled to deduct any calculated allowance related to the year of transfer. The allowance for each share is equal to the cost price of the share multiplied by a risk free interest rate based
Any part of the calculated allowance one year exceeding the dividend distributed on the share may be carried forward and set off against future dividends received on, or gains upon realisation of, the same share, and will be added to the basis for the allowance calculation. Excess allowance cannot result in a deductible loss. Norwegian Personal Shareholders may credit withholding tax paid in Sweden (see above) in their Norwegian tax payable related to foreign income. If the Norwegian Personal Shareholder is not paying tax in a given year, the tax paid in Sweden may be carried forward for up to five years. Norwegian Corporate Shareholders Dividends distributed to shareholders in the Company who are limited liability companies (and certain similar entities) resident in Norway for tax purposes (“Norwegian Corporate Shareholders”), are effectively taxed at a rate of 0.75% (3% of dividend income from such shares is included in the calculation of ordinary income for Norwegian Corporate Shareholders and ordinary income is subject to tax at a flat rate of 25%). The Government has suggested that the tax rate will be reduced to 24% in 2017, resulting in an effective tax rate of 0.72%. Norwegian Corporate Shareholders may credit withholding tax paid in Sweden in their Norwegian tax payable related to foreign income. Note that only 3% of the withholding tax is creditable, as only 3% of the dividend is taxable. If the Norwegian Corporate Shareholder is not paying tax in a given year, the tax paid in Sweden may be carried forward for up to five years. Repayment of paid in capital If paid in capital (share capital or premium) is paid back to a Norwegian shareholder, such a repayment is not taxable as a dividend or a gain on shares. The repayment will reduce the shareholders input value (and/or excess tax-free return for Norwegian Personal Shareholders) related to the shares. Note that there is a share for share principle applicable for Norwegian shareholders, and the paid in capital per share may therefore differ.
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Taxation of capital gains on realisation of shares Norwegian Personal Shareholders Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes. A capital gain or loss generated by a Norwegian Personal Shareholder through a disposal of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the Norwegian Personal Shareholder’s ordinary income in the year of disposal. Ordinary income is taxable at a rate of 25%. As for dividends, the ordinary income is adjusted with a factor of 1.15, giving an effective tax rate of 28.75% (25% x 1.15). The Government has suggested that the tax rate will be reduced to 24% in 2017, and the adjustment factor will therefore be increased to 1.24. The taxable gain/deductible loss is calculated per share as the difference between the consideration for the share and the Norwegian Personal Shareholder’s cost price of the share, including costs incurred in relation to the acquisition or realisation of the share. From this capital gain, Norwegian Personal Shareholders are entitled to deduct a calculated allowance provided that such allowance has not already been used to reduce taxable dividend income. The allowance may only be deducted in order to reduce a taxable gain, and cannot increase or produce a deductible loss, i.e. any unused allowance exceeding the capital gain upon the realisation of a share will be annulled. If the Norwegian Personal Shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of, on a first-in first-out basis. Norwegian Personal Shareholders may credit withholding tax paid in Sweden on gains in their Norwegian tax payable related to foreign income. If the Norwegian Personal Shareholder is not paying tax in a given year, the tax paid in Sweden may be carried forward for up to five years. Norwegian Corporate Shareholders Norwegian Corporate Shareholders are exempt from tax on capital gains derived from the realisation of shares in the Company. Losses upon the realisation and costs incurred in connection with the purchase and realisation of such shares are not deductible for tax purposes. Norwegian Corporate Shareholders may not credit Swedish withholding tax on gains, as the gains are not taxable in Norway. Net wealth tax The value of shares is included in the basis for the computation of net wealth tax imposed on Norwegian Personal Shareholders. Currently, the marginal net wealth tax rate is 0.85% of the value assessed. The value for assessment purposes for non-listed foreign shares is the assumed fair market value 1 January in the assessment year (i.e. the year following the relevant fiscal year). The tax value of the company at the 1 January in the year before the assessment year may be used provided (i) the taxpayer request that the tax value is used and (ii) the taxpayer is able to substantiate the tax value. Norwegian Corporate Shareholders are not subject to net wealth tax. VAT and transfer taxes No VAT, stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares.
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This presentation and its appendices (collectively the "Presentation") has been prepared and distributed to a limited number of potential investors (each a "Recipient"). The presentation is confidential and shall not be disclosed without the express written consent of Carnegie AS ( "Carnegie"). The purpose of the presentation is to enable Recipients in assessing a potential purchase, subscription or other form of transaction ( "Transaction", and in relation to a Recipient, an “Investment") relating to Data Center Invest AB (the "Company") or shares or other securities issued by the Company. Carnegie is acting as exclusive manager for the Company in the contemplated transaction. The presentation has been prepared and distributed to professional investors and a limited number of non-professional investors selected at Carnegie's discretion. This Presentation does not constitute an offer to purchase or subscribe for financial instruments. A prospectus in accordance with the Prospectus Directive 2003/71/EU, as amended and implemented, is not and will not be prepared in connection with the placement of shares. The information in the presentation is prepared to the best of our knowledge based of information from the Company and its owner(s). However, Carnegie cannot guarantee that the information received is correct or complete. Furthermore, the Presentation may contain forward-looking statements, assumptions regarding future developments (including interest rates) and
The material in this Presentation should not be construed as a legal, financial or tax advice. Recipients should consult with their own legal, financial and tax advisors. The content of the Presentation may be supplemented with information provided verbally or otherwise and with information provided after the date of this Presentation. Carnegie assumes no responsibility to update this Presentation. Carnegie expects that Recipients have sufficient knowledge and experience in commercial and investment activities insofar that they can independently assess the content and risks associated with the Investment, and further that the Recipient can bear the financial risk and burden associated with the Investment including a loss of the entire amount invested. The Presentation and the interpretation of it is subject to Norwegian law and the non-exclusive jurisdiction of Norwegian courts (Oslo District Court). For investors in the United States
In relation to the United States and U.S. persons, this Presentation is strictly confidential and being furnished solely in reliance on applicable exemptions from the registration requirements under the U.S. Securities Act of 1933, as amended. The shares of the Company have not and will not be registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold within the United States, or to or for the account or benefit of U.S. persons, unless an exemption from the registration requirements of the U.S. Securities Act is available. Accordingly, any offer or sale of shares in the Company will only be offered or sold (i) within the United States, or to or for the account or benefit of U.S. persons, only to qualified institutional buyers (”QIBs”) in private placement transactions not involving a public offering and (ii) outside the United States in offshore transactions in accordance with Regulation S. Any purchaser of shares in the United States, or to or for the account of U.S. persons, will be deemed to have made certain representations and acknowledgements, including without limitation that the purchaser is a QIB.
For investors in the United Kingdom
In relation to the United Kingdom, this Presentation and its contents are confidential and its distribution (which term shall include any form of communication) is restricted pursuant to section 21 (restrictions on financial promotion) of the Financial Services and Markets Act 2000 (as
promotion) Order 2001 (as amended) or who are persons to whom the document may otherwise lawfully be distributed. This Presentation may only be distributed in circumstances which do not result in an offer to the public in the United Kingdom within the meaning of the Public Offers
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