Good morning and welcome to this presentation of our milestone transaction that was announced yesterday evening. My name is André Gaden, I'm CEO of PPI and together with me is our CIO Ilija Batljan. Together we will walk you through the strategic rationale and key metrics for this transaction and we will end the presentation with a Q& A session. We will make this presentation brief so that those interested can also join SBB's call which is in about 30 minutes. Let's get started. As with any transaction, there are important disclaimers and risk factors to consider, so please take time to review them at your convenience. This is a big day for PPI. With this agreement, PPI steps into a new league. Following this transaction, PPI will be the largest listed owner of social infrastructure properties in Europe and we are incredibly proud to have achieved this.
With strong support and commitment from our main owners Aker and SBB, PPI is expanding its portfolio to more than three times its current scale. We increased the share of government-backed tenancies coupled with increased exposure to the growing elderly and healthcare segment supporting earnings stability and future dividend capacity. The transaction will generate immediate financial benefits such as an estimated 14% increase in our normalized net income from property management per share. At the same time, PPI's balance sheet will remain solid with an estimated LTV below 50% and a net debt to EBITDA ratio of 9x . PPI expects to realize financial synergies to improve financing terms while retaining its attractive dividend policy combined with continued focus on growth and market consolidation.
Further, it has also been announced that following completion of this transaction, PPI intends to apply for a primary listing at Na Stockholm with a secondary listing on Euronext Oslo Børs. Now let's have a look at the portfolio. The acquisition involves a total of 737 properties across Norway, Sweden, Denmark, and Finland to a total gross asset value of NOK 37 billion. The portfolio is characterized by public tenants, long duration leases with robust rental metrics and high occupancy rates similar to the existing PPI portfolio. The majority of the properties are located in Sweden and more than 50% of the portfolio is exposed to the growing elderly care and healthcare segments. Now let's have a look at the combined portfolio and how it will look like in terms of geographic exposure. By combining SBB's social infrastructure portfolio and PPI, our geographic exposure will be more balanced.
Most notably, our presence in Sweden will increase to 53% of the gross asset value while our exposure in the Norwegian market will reduce from 89% to 29%. Next, let's see how this transaction will impact our exposure to the elderly and healthcare segment. Our properties are located in regions with forecasted population growth and a growing aging population which drives lasting demand for social care. By including social infrastructure in our portfolio, we will increase our exposure towards elderly care and healthcare from 17% to 53% of the combined portfolio, positioning ourselves in a growing segment. Before I hand over to Ilija Batljan, let me also illustrate how the combined portfolio will benefit from an increased share of government-backed tenants. Gross rental income will more than triple as a result of the transaction from approximately NOK 1 billion- NOK 3.6 billion.
In parallel, the proportion of government-backed tenants will increase from 80% to 84% backed by long-duration leases, providing resilient earnings and supporting future dividend capacity. To summarize, our combined portfolio will benefit from broader diversification across the Nordics and asset segments, which improves portfolio strength and stability. This significantly strengthens PPI's strategic positioning and enhances its access and capital markets profile. I will now hand over to Ilija, who will guide you through the transaction details.
Thank you, André. You have already put forward the beauty of this transaction and the importance for PPI strategic development. I will just start with a few numbers to get more flavor on. First on property acquisition, then on financing and also timeline, which of course because this is a transaction that has to be approved by AGMs, it will take a few weeks until approval. However, there is strong shareholder support. Everything is in place for the transaction to be closed mid December. If you look at property acquisition, we are acquiring a large portfolio of social infrastructure properties for NOK 34 billion. The acquisition is done at a discount of 8% to SBB's book value, which is confirmed by independent external valuers per Q3. However, that is in line with where the market is today.
That is also why we have been able to put very robust financing behind the acquisition. We are financing the acquisition with NOK 13.8 billion in new equity. On top of that we are taking in an investment grade bridge financing. Two years investment grade bridge financing from JPMorgan and DNB. Also using our own cash at balance sheet. The equity is fully secured in the transaction. We are financing it by issuing consideration shares to SBB. It is in total NOK 10.3 billion in consideration shares. Then on top of that we are doing private placement of NOK 3.5 billion. This private placement has already taken place yesterday evening and it has been announced. If you look at capital and voting as you can see from the slide, both SBB and Aker are within the thresholds that they had before the transaction. We can go to the next slide.
As André already mentioned, at the next slide you will see that PPI is moving from, you can see, being newcomer in space to be largest player within social infrastructure and actually being largest social infrastructure player in Europe. We can take next slide please. Why is this transaction important for PPI shareholders? Basically it is not only because of the scale. Scale is very important and in this case actually scale is also de-risking PPI's portfolio by both taking in low risk assets but also by diversification. One of the most important point is that the transaction is delivering expected increase in income from property management with 14% per share for PPI shareholders. That means no matter if you participate in in the equity or not, you are winning on this transaction.
is a real triple win for all shareholders and all involved including PPI, SBB, and Aker. As I mentioned before, you can see on the right side it is actually an amazing 14% increased income from property management per share and at the same time 8% increased NRV per share. Next slide please. Already yesterday evening Fitch announced that PPI has been awarded a BBB rating. PPI is actually today the only listed business within the real estate space having a BBB rating. As you can see at this slide, the transaction is fully improving PPI's key ratio across the ratios, both focusing on staying at net debt to EBITDA at nine times and having LTV below 50%. This will create large value for the shareholders.
At the right side of the slide you can see that PPI has still headroom to decrease its financing margins and this will of course continue to improve PPI's income from property management per share. Also going further, next slide please. To sum it up, as André already said in the introduction, the transaction is more than tripling PPI's portfolio to NOK 53 billion, creating the largest listed social infrastructure company in Europe. Number two, 84% of rental income from long duration government-backed tenants coupled with increased exposure to the elderly and healthcare segment, providing stable and resilient earnings and support future dividend capacity. We say 84% but actually we are probably north of 90% because we are not putting in parkings and other income that is directly related to properties.
Number three, we are expecting that income from property management per share will increase with 14% reflecting the transaction's immediate financial benefits for all shareholders. Number four, as already announced yesterday evening by Fitch, this is enhancing PPI's credit profile and PPI got awarded rating yesterday evening. Number five, Aker is continuing to support both PPI and SBB. SBB in this case because they are buying shares from SBB to support SBB's increased cash position. At the same time they are investing NOK 5.4 billion in PPI, which is amazing that we have the shareholder that is supporting in this way. Number six, we are expecting to realize financial synergies, as I already mentioned, given the stronger credit profile. Last, we will redomicile PPI as a Swedish public limited company and apply for primary listing at Nasdaq Stockholm with a secondary listing on Euronext Oslo Børs.
In that way, both getting exposure to very competitive listed real estate in Sweden and at the same time retaining our strong connection to Norway and our Norwegian shareholders. I will stay there and we can take questions.
Thank you. First question, when did you start the process and who initiated it?
PPI has been working very hard to grow its business. We have been announcing transactions almost every month since listing. This is a natural next step for us to become the largest owner of social infrastructure in Europe.
Thank you. Where do you see PPI go from here?
With this transaction? We will also, after the transaction, as said, have a very strong balance sheet, which has been important for us since we started our growth journey after the IPO. We will be well positioned to continue to grow the company and continue to be a consolidator in the market.
Thank you. Reading the news, we see Rekka and Aker all over. Is this first and foremost. Sorry, is this first and foremost a transaction which benefits occur?
Yeah, this is the transaction that absolutely benefits Aker. The transaction benefits both SBB and PPI and all of PPI's shareholders. This is actually beautiful. Triple win.
PPI is acquiring NOK 37 billion worth of properties for NOK 34 billion. Why the discount?
The discount is first, the properties have been valued by external valuers to NOK 37 billion and that is fair value of the properties. However, public markets are trading at large discounts. In this type of transaction that is very close to public market, it's normal to have this discount.
Thank you. Do you still have available capital to buy new assets?
As I said, having a strong balance sheet has been important for PPI from when we started our growth. After this transaction, we will also have a strong balance sheet and be able to continue that growth going forward. Important for us is to maintain our solid balance sheet also going forward and especially focus on focusing on a net debt to EBITDA below 9x .
What will you prioritize going forward? Growth or dividend?
We are a growth company, but at the same time we have a dividend policy that says 60% of cash earnings. This will also be important going forward. We will balance those two.
Thank you. Will you refinance existing debts in Public Property Invest? Will your debts mirror your property exposure, that is 29% of gross asset value?
Our debt will be related to our properties in the way that we will not have currency risk as we have done before. Either we hedge currency risk to our basic, in this case Norwegian krone, or we match it with natural hedge.
Thank you. Should we now consider PPI an Aker or an SBB company?
PPI is both Aker and SBB company but also Celina Midelfart or Kåre Krog or Kenneth Bjørn or I can give names of many of the shareholders of PPI. It is shareholders company.
What are the main benefits of moving to Nasdaq Stockholm?
First of all, we see that there is a much larger real estate sector at Nasdaq Stockholm that gives more liquidity to the share.
Thank you. There are no further questions. That concludes today's Q& A session.
Thank you very much.
Thank you so much for listening.