• Norgani bid turns competitive

The bid for Scandinavia's biggest hotel owner Norgani looks set for a longer run than expected as the buyers, understood to be Starwood Capital and rival private equity house Niam, have missed the deadline for completing due diligence.

Norgani's owner, Norwegian Property, said last week that it had now ended the period of exclusivity and had already received interest from other parties.

According to Norwegian Property's statement, delays in turning the original offer into a final sale agreement have been caused "by more detailed due diligence work than expected in phase one and buyers' formal financing". A further update was likely in the next couple of weeks, added the statement.

Sweden's Niam earlier this year launched its fourth property fund with Eu700m of equity giving it an investment capacity of between Eu2.5bn and Eu3.0bn for its targets in Scandinavian and Baltic countries.

It has not previously invested in hotels in a focused way but past investments have included mixed-use projects with a hotel component such as the new Stockholm Waterfront office, hotel and conference facility. Previous partners include Goldman Sachs' Whitehall Funds.

The current deal is particularly interesting in that the price of Norgani has increased by almost a tenth since it was sold eight months ago. Norwegian, through a vehicle called Oslo Properties created with EQT, the owner of Scandic, paid NOK10.1bn.

The new deal is at NOK11.2bn ($2.2bn) for the 74 hotel properties. It would deliver an uplift of 27% on the NOK3.75bn of equity put in by the buyers of Norgani last year.

Norgani has been headed by Roar Ingdal since the start of May. He had been running the Nordic and Baltic arm of Royal Caribbean Cruise Lines. Eva Eriksson, the previous Norgani CEO, quit in October following the completion of the takeover by Norwegian.

For Norwegian, a deal is necessary to take its gearing below 70% and avoid the need for a rights issue.

Meanwhile, the strong appetite of Scandinavian investors was further demonstrated last week with the purchase of the Hyatt Regency Montreal by Pandox for Can$58.5m. The 605-room property joins with the InterContinental in the city that Pandox bought last July, giving Pandox almost 1,000 rooms in total.

The InterContinental was the first move by Pandox into North America and the latest deal is the first Hyatt property under its ownership. The Hyatt deal with vendor Ashford Canada Trust is expected to close in mid-June.

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