Deutsche Telekom records €1.7B from real estate sales in 2002, significantly reducing its debt

January 3, 2003

3 Min Read

BONN, Germany -- Deutsche Telekom AG generated proceeds totalling EUR 1.7 billion from sales of the Group's real estate in 2002. EUR 0.7 billion was realised from the sale of real estate in 2001. The total of EUR 2.4 billion to date from real estate sales represents a considerable contribution to reducing the Deutsche Telekom Group's debt and interest burden. Sales of around EUR 1.1 billion were concluded in the fourth quarter of 2002."As part of its four division strategy, Deutsche Telekom is concentrating on its core business activities in the main growth segments of the telecommunications market and has therefore spun off the sale of the Group's real estate activities. As the good business results for Sireo's second financial year show, this strategy is proving its worth. With this realisation of our real estate holdings, this Deutsche Telekom affiliate is making an important contribution to the reduction of costs and debt", explained Dr. Karl-Gerhard Eick, Chief Financial Officer of Deutsche Telekom AG.Various paths have been taken to generate these proceeds. Sireo Real Estate Asset Management GmbH – the Deutsche Telekom affiliate entrusted with the systematic development of Deutsche Telekom's real estate portfolio – generated almost EUR 1 billion from individual sales of properties. Approximately EUR 750 million was additionally generated through the sale of sub-portfolios, i.e. the bundling of Deutsche Telekom properties at mainly metropolitan locations. Structured funds were also developed. The “Sireo Immobilienfonds No. 1” (Sireo No. 1 real estate fund) was positioned with insurance and pension companies with a volume of EUR 525 million. Sireo worked together with well known partners in the conclusion of the real estate transactions. The positioning of the real estate fund was supported by Stadtsparkasse Köln. Hypothekenbank AG in Essen arranged the leverage debt financing for the fund.The real estate transactions are important steps along Deutsche Telekom's path towards reducing its net debt considerably by the end of 2003. The target, based on a debt level of around EUR 64 billion at September 30, 2002, is to reduce net debt to around three times the expected Group EBITDA for the coming year of between EUR 16.7 billion and EUR 17.7 billion. In addition to the real estate transactions mentioned above, Deutsche Telekom also concluded sales in the past few weeks which contribute a total volume of more than EUR 1.2 billion to reducing the debt level. The sale of around 10 per cent of the shares of T-Online International to institutional investors around the world generated a transaction value of around EUR 730 million. The sale of the 10.87 per cent holding in the satellite operator EUTELSAT S.A. generated a transaction value of approximately EUR 210 million. A sale price of 55 million dollars was agreed for the sale of the 16.3 per cent holding in the Ukrainian mobile communications company UMC to the Russian company MTS. Furthermore, Deutsche Telekom's subsidiary T-Systems International sold receivables from customers amounting to around EUR 273 million as part of an asset backed securities transaction.Deutsche Telekom AG

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