TIDMSPDI
RNS Number : 1302T
Secure Property Dev & Inv PLC
10 October 2017
Secure Property Development & Investment PLC/ Index: AIM /
Epic: SPDI / Sector: Real Estate
10 October 2017
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
Proposed acquisition of portfolio of logistics properties in
Romania
Secure Property Development and Investment PLC (AIM: SPDI), the
South Eastern European focused property and investment company,
announces the proposed acquisition of up to a 50% interest in a
portfolio of fully let logistics properties in Romania (the
"Olympians Portfolio"), which currently generates a Net Operating
Income of approximately EUR4.5m per annum ('the Proposed
Acquisition'). The Proposed Acquisition, which is subject to a
number of conditions and banking consents, including the
satisfactory completion of due diligence and funding, is in line
with the Company's strategy to build a leading SE European property
company with a diversified portfolio of prime income producing real
estate.
The Olympians Portfolio: Fully let Grade A industrial properties
generating EUR4.5m income p.a.
The Olympians Portfolio was co-developed and owned by GE Capital
('GEC') and is now owned by GEC's development partner Myrian Nes
Ltd, a leading developer of Grade A logistics properties in Romania
(the "Vendor Partner"). It comprises warehouses strategically
located close to national highways, thus facilitating the
transportation of goods throughout the country and the wider
region. The Olympians Portfolio is located across three key
logistics areas in Romania, being the capital Bucharest, the
industrial city and automotive centre of Timisoara on the
Romania/Hungary border, and Brasov, a major city close to the
capital. The existing portfolio of 100k sq m of warehousing and
office facilities is fully let to largely multinational tenants and
generates a Net Operating Income of EUR4.5m.
SPDI's existing logistics terminal in Bucharest (the Innovations
Logistics Park) was developed by Myrian Nes and the Olympians
Portfolio transaction, should it complete, is expected to further
cement SPDI's longstanding relationship with the Vendor Partner.
The Vendor Partner intends to develop additional warehouse space,
which SPDI is expected to have first right of refusal to
acquire.
The Proposed Acquisition complements SPDI's existing logistics
properties in Greece and Romania which, as announced on 28
September 2017, generated net operating income of EUR1.8m in H1
2017. Subject to acquiring the full 50% interest, the Olympians
Portfolio would increase the total lettable area of the Company's
logistics Assets Under Management (AUM) to 135k sq m.
Proposed Acquisition to be funded via debt and equity
package
The Gross Asset Value of the Olympians Portfolio is
approximately EUR50m, and there is a senior loan liability of
approximately EUR30m secured against the portfolio.
The consideration for the 50% interest is expected to be
approximately EUR8-9m, which will be finalised once the Company
completes its due diligence. The Company has already transferred,
in aggregate, EUR3.6m to the Vendor Partner in the form of a 10%
coupon loan, convertible into shares of the SPV that will be
created to hold the Olympians Portfolio ("Vendor Loan"). EUR0.425m
of this amount has been financed directly by and through entities
connected with certain of the Directors in the form of an unsecured
loan to the Company. SPDI has the right, until the end of February
2018, to convert this Vendor Loan into equity in the SPV that will
hold the Olympians Portfolio - a process which is expected to take
2-3 months to complete if the right is exercised. The Vendor Loan
is repayable in the event SPDI does not exercise its conversion
right with payment to be made within 12 months from notification of
such event to the Vendor Partner.
The Company intends to raise the majority of the consideration
necessary to close the Proposed Acquisition through the issue of a
financial instrument with a value of between EUR3.5-4m, 35% of
which consists of a convertible loan and 65% of which is made up of
a warrant ("the Instrument"). The balance of the funding is
expected to be provided in the form of external debt, over which
the Company is in discussions with providers.
The convertible loan element of the Instrument bears a 6.5%
coupon, has a 7 year term and is convertible into ordinary shares
of the Company at the option of the holder at 25p starting from 1
January 2018. The warrant element of the Instrument provides
subscribers with warrants over ordinary shares in the Company,
which are exercisable at 10p until 31 December 2017.
To date, the Company has received commitments in respect of the
Instrument totalling EUR2.4m. EUR2.0m of this amount has already
been received, with EUR1.7m being capital already transferred to
the Vendor Partner, which the Company had borrowed and which will
be rolled over into this Instrument. Certain of the Directors of
the Company have committed, either directly or through connected
entities, EUR0.485m to date towards the Proposed Acquisition.
EUR0.425m of this has already been received and transferred to the
Vendor Partner as disclosed above. These funds are unsecured and do
not pay any interest. The Directors are considering participating
in the Instrument, which would involve rolling their loans into the
Instrument when this is finalised and would result in the full
EUR0.485m capital commitment being converted into the
Instrument.
Given the above financing already in place, and the Vendor Loan
already paid, the Company would require approximately a further
EUR4m in funding to close the Proposed Acquisition. Documentation
in respect of the verbal commitments for the Instrument, and the
rolling of the Director Loan, will be put in place in due
course.
SPDI CEO Lambros Anagnostopoulos commented, "The proposed
acquisition of a fully let Grade A logistics portfolio underpins
our strategy to increase SPDI's income generating capacity in one
of Europe's fastest growing economies and in the strategically
important South East corner of the EU. The commitments received to
date from both existing and new investors for the Instrument
represent an endorsement of our strategy and management's ability
to execute it. We continue to enjoy the support of investors who
have backed us in the past to firstly generate above market returns
on our investments; and secondly to build SPDI into a leading
income producing property company in a region of the EU which has
the highest growth potential.
"The recent disposals at or above book value of Terminal Brovary
and the pre-sale agreement regarding the Kiyanovski plot of land,
both in Kiev, together with the plan to acquire the Olympians
Portfolio demonstrate our ability to sell assets at prices that
match the value indicated in the Company's accounts and also to
acquire quality income producing properties at attractive rates.
This serves to highlight the anomaly that is the 50% plus discount
at which our shares trade at compared to our Net Asset Value.
Furthermore our NAV does not take into account the capital value
appreciation we expect to see in the medium term as income yields
in the region, which still hover at levels double those of western
EU countries, converge to those in the rest of the EU as the
underlying economies, including Romania, continue their fast pace
of growth."
Director Commitments and Loans
The capital commitments from certain directors to the Company
referred to above, totalling EUR0.485m (the "Director Loan"), are
constituted as follows:
Lambros Anagnostopoulos EUR175k
Kalypso Nomikos EUR260k
Ian Domaille EUR50k
In addition but separate to the Proposed Acquisition, earlier
this year, certain directors loaned EUR0.5m to the Company in
relation to another possible acquisition (the "Second Director
Loan"). The Second Director Loan is unsecured and pays interest at
a rate of 8% per cent and is repayable in the event that the
possible acquisition does not proceed. The loan amounts per
director for the Second Director Loan are as follows:
Lambros Anagnostopoulos EUR100k
Franz Horhager EUR125k
Kalypso Nomikos EUR150k
Ian Domaille EUR125k
The directors referred to above are together considered to be
related parties of the Company pursuant to the AIM Rules. The
Director Loan and Second Director Loan, when aggregated, is deemed
a related party transaction pursuant to the AIM Rules. Accordingly,
the directors of the Company (other than those set out above),
having consulted with the Company's Nominated Adviser, Strand
Hanson Limited, consider that the terms of the Director Loan and
Second Director Loan are fair and reasonable insofar as
shareholders are concerned.
Further updates on the Proposed Acquisition will be provided as
and when appropriate.
* *S * *
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information please visit www.secure-property.eu or
contact:
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Lottie Brocklehurst St Brides Partners Tel: +44 (0) 20 7236
Frank Buhagiar Ltd 1177
Jon Belliss Beaufort Securities Tel: +44 (0) 20 7382
Elliot Hance Limited 8300
Notes to Editors
Secure Property Development and Investment plc is an AIM listed
property development and investment company focused on the South
East European markets. The Company's strategy is focused on
generating healthy investment returns principally derived from: the
operation of income generating commercial properties and capital
appreciation through investment in high yield real estate assets.
The Company is focused primarily on commercial and industrial
property in populous locations with blue chip tenants on long term
rental contracts. The Company's senior management consists of a
team of executives that possess extensive experience in managing
real estate companies both in the private and the publicly listed
sector, in various European countries.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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