Nobia agrees sale and lease back of kitchen factory

Swedish kitchen furniture group Nobia, owner of UK brand Magnet, has entered into an agreement with Hines, a global real estate investment, development and management firm, regarding the sale of the kitchen factory property under construction in Jönköping.

The agreed value of the kitchen factory property amounts to SEK 1,350m. In total, Nobia’s cash proceeds are estimated to amount to SEK 1,090m. Out of the cash proceeds, approximately SEK 330m are withheld by the buyer and will be paid to Nobia according to certain conditions up until the final completion of the property.

In addition, the buyer will assume expenditures for completing the remaining construction work. The sale will result in an impairment of the property book value of approximately SEK 100m.

The transaction is structured as a “sale and leaseback”-transaction whereby Nobia will also enter into a 20-year rental agreement for the property with the buyer, with an option for Nobia to extend the rental agreement for another 20 years. The rental agreement will be recognized in Nobia’s balance sheet according to IFRS16.

Jon Sintorn, President and CEO, said: “The new factory represents Nobia’s most significant strategic initiative to date. With a high degree of automation and digitalisation as well as leading sustainability performance, the factory will consolidate our position as the leading kitchen specialist in the Nordic region. Concurrently, we are in the final stages of harmonizing our Nordic product ranges and processes to achieve further scale and efficiency benefits. Manufacturing and logistics efficiency will improve, lead time for made-to-order kitchen production will be significantly reduced and we are facilitating increased capacity to support long-term growth. Through the sale and leaseback transaction, we have successfully completed one of the activities to strengthen our financial position.”

The installation of machinery and production equipment is progressing as planned and manufacturing of kitchen cabinet components for assembly at other sites as well as flat-pack kitchen cabinets for customers has started. At the end of 2024, the new kitchen factory will have the capability to produce complete kitchen orders.

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