UK-based private equity firm Terra Firma Capital Partners Ltd. said late Monday that it has agreed to buy property management company Annington Homes from Japanese brokerage Nomura Holdings Inc. (NMR: Quote) for an enterprise value of 3.2 billion pounds or $5.09 billion. The deal is expected to be completed by the end of 2012.
Terra Firma said the value is comprised of 1 billion pounds in the form of new equity from a specialist fund, and of new debt financing as well as assumed existing debt of 2.2 billion pounds.
Guy Hands, Chairman and Chief Investment Officer of Terra Firma, said, "It (Annington) is a pure play UK residential property company with a blue chip tenant on a lease of over 180 years and with the ability to benefit from the strength of the property market. We look forward to working with Annington's management as it moves on to the next stage in its development."
Separately, Nomura said that its UK subsidiary Nomura International Plc has agreed to sell Annington Homes to Terra Firma.
In 1996, Nomura acquired about 57,000 residential properties in the UK Ministry of Defence's or MoD's Married Quarters Estate, and formed Annington to manage it. Guy Hands, who was employed with Nomura at that time, played a key role in the company's purchase of Annington Homes.
The estate was sold and leased back to the MoD with properties being released for sale by Annington as they became surplus to the MoD's requirements. The estate, which now comprises almost 40,000 properties, has been managed by Terra Firma for the past 10 years.
Annington's primary business is renting residential property to the MoD, conducting periodic rent reviews and selling properties released by the MoD. Annington also rents residential property to third parties and has in-house planning and development expertise.
Nomura is currently in the process of rebuilding itself under the new management team that was formed following an insider-trading scandal in June.
Regulators had found in June that Nomura had engaged in insider trading in connection with an equity offering by Tokyo Electric Power Co. in September 2010. Nomura was the underwriter for the offering. Non-public information was leaked by Nomura employees.
In August, media reports revealed that Nomura was looking to cut costs additionally to the tune of $1 billion over the next nineteen months, primarily by eliminating jobs and trimming payroll overseas.
The company reportedly sees nearly half of the cost cuts coming from the reduction in payrolls and the remaining from merging operations.
The reductions are said to be focused on Nomura's struggling international wholesale division, which saw the implementation of a $1.2 billion cost reduction plan late last year also.
NMR closed Monday's trading at $4.00, up $0.08 or 2.04 percent on a volume of 244,098 shares.
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by RTT Staff Writer
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