At 30 September 2014 the Group had access to a EUR220.0 million
credit facility from Blackstone Real Estate Debt Strategies
("BREDS") and Bank of America Merrill Lynch International Limited
(BAML) of which the Group had an unpaid principal balance of
EUR217.9 million. The Company's gross Loan to Value ("LTV") as at
that date was 77.3%.
The Group seeks to avoid significant exposure to unforeseen
upward interest rate movements, with all third party debt currently
hedged by means of interest rate cap agreements.
Accounting, legal and regulatory
The Group has processes in place to ensure that the
administrators maintain accurate accounting records and that
sufficient evidence to support the accounts is available to the
auditors upon request. The Administrator also operates established
accounting systems that address issues of control and completeness.
Procedures are in place to ensure that the quarterly NAV and Gross
Asset Value are calculated properly by the Administrator, and the
Group's property assets are valued quarterly by an independent
specialist property valuation firm which is provided with regular
updates on portfolio activity by the Investment Manager.
The Administrator monitors legal requirements in Luxembourg to
ensure that adequate procedures and reminders are in place to meet
the Group's legal requirements and obligations. The Investment
Manager undertakes appropriate legal, tax and structuring due
diligence with the assistance of external advisers when transacting
and managing the Company's assets. All contracts entered into by
the Group are reviewed by the Company's legal and the Group's other
advisers. Processes are in place to ensure that the Group complies
with the conditions applicable to property investment companies set
out in the Listing Rules and the Circulars issued by the Luxembourg
financial supervisory authority, the CSSF.
The Administrator attends all Board meetings to be aware of all
announcements that need to be made and the Group's advisers are
aware of their obligations to advise the Administrator, and where
relevant the Board, of any events which require notification be
made to the Board.
Finally, the Board is satisfied that the Investment Manager and
Administrator have adequate procedures in place to ensure continued
compliance with regulatory requirements of the UK Financial Conduct
Authority and the CSSF.
Citco REIF Services (Luxembourg) S.A. ("Citco") has entered into
an Administration Agreement with the Company which may be
terminated by either party giving to the other not less than 120
days notice in writing. The Administrator is entitled to an annual
fee equal to EUR1.1 million pa.
Management
The Board has appointed Internos Global Investors Limited
("Internos") in replacement of Invista Real Estate Investment
Management Limited ("Invista") to execute the investment objective
and policy set out above pursuant to an investment advisory
agreement dated 22 September 2011 (the "Internos IAA").
The appointment of Internos was approved by (i) the CSSF as the
Company's regulator (in relation to Internos acting as manager and
promoter of the Company); and (ii) Bank of Scotland in its capacity
as former facility agent in connection with the credit facility
provided by it to the Company at that time. The Company announced
on 15 December 2011 that Internos has taken on the role of
investment manager with effect from 15 December 2011 and that the
proposed change of the Company investment objective and policy to
implement a structured realisation of its portfolio of assets was
subject to regulatory approval. The Company concluded discussions
with the CSSF on this point and it may now pursue a structured
realisation of its assets in line with the resolution approved by
the Company's shareholders at the EGM on 14 October 2011, as an
investment strategy under the Company's original investment
policy.
The Internos IAA (including the transitional arrangements
thereunder), may be terminated by either the Company or Internos on
6 months written notice. The Internos IAA may also be terminated
immediately by the Company in certain circumstances, such as in the
case of the departure of certain key persons of Internos or for
regulatory reasons.
Management fees
From 15 December 2011, when Internos took on the management of
the Company's assets from Invista, the Company agreed to pay
Internos pursuant to the Internos IAA a management fee of 1.25% per
annum on the Net Asset Value attributable to the Company's ordinary
shareholders, subject to a minimum of EUR1.0 million per annum.
Assuming an unchanged level of NAV, this was approximately EUR1.6
million per annum lower than the management fee payable under the
Invista IMA, representing a reduction of 47%.
In addition, the Company will pay Internos a realisation fee
equal to 12.5% of the amount by which cash returned to ordinary
shareholders exceeds EUR82.8 million (the "Notional Market Cap" as
defined in the Internos IAA), compounded thereafter at 10% per
annum.
Significant contracts
Apart from the Internos IAA and Administration Agreements, other
significant contracts are with the following parties:
-- Citco Bank Nederland N.V. - Luxembourg Branch (Citco Bank) as Custodian Bank
-- Citco REIF Services (Luxembourg) S.A. (Citco) as Central
Administrator & Company Secretary & The Registrar &
Transfer Agent
-- Capita IRG Trustees Limited as Depository Agent
-- Internos Global Investors Ltd. ("Internos") for accounting services
-- KPMG Luxembourg, Société coopérative, for auditing and tax advisory services
Other Significant contracts which have been entered into by the
Company are listed in Part XII, Section 8 of the Prospectus.
Creditor payment policy
It is the Group's policy to ensure settlement of supplier
invoices in accordance with stated terms.
Donations
The Company made no political or charitable donations during the
year
Directors
The Directors of the Company (who together with their beneficial
interests in the voting rights of the Company's ordinary share
capital as at 30 September 2014) are listed below:
Director 30 Sep 14 30 Sep 30 Sep 13 30 Sep
14 13
Number of shares % Number of shares %
Tom Chandos (Chairman) 261,000 ordinary 0.1004 261,000 ordinary 0.1004
shares, and 10,200 shares, and
preference shares 0.0350 10,200 preference 0.0350
shares and
10,200 warrants 0.0350
Michael Chidiac - - - -
Robert DeNormandie - - - -
William Scott - - - -
Directors are elected and may be removed with or without cause
or replaced by the shareholders in accordance with the rules set
out in articles 13 and 26 of the Articles.
Directors' Remuneration
The appointment dates and gross remuneration of the Directors
(not including expenses) during the current and previous financial
year was as follows:
Director Date of appointment 30 September 30 September
2014 2013
EUR EUR
Tom Chandos (Chairman) 17 November 2006 52,000 52,000
John Frederiksen (resigned
23 April 2013) 17 November 2006 - 18,449
Michael Chidiac 17 November 2006 35,000 35,000
Robert DeNormandie 26 April 2007 40,000 40,000
28 September
William Scott 2012 30,000 30,000
157,000 175,449
The Directors do not have service contracts with the Company.
The terms of appointment provide that a Director shall retire at
every Annual General Meeting.
The Directors receive a base fee of EUR30,000 per annum, and the
Chairman receives EUR52,000 per annum. The Chairman of the Audit
Committee receives an additional fee of EUR5,000 per annum,
reflecting his additional responsibilities and workload. All
Luxembourg based Directors also receive an additional EUR5,000 per
annum in recognition of their additional work.
The Directors are not eligible for bonuses, pension benefits,
share options or other incentives or benefits.
Compensation in case of resignation, removal from office or
takeover bid.
The Company has not entered into any agreements with the
Directors providing for compensation if they resign or are removed
from office without valid reason or if their appointments cease
because of a takeover bid.
Disclosure of information to auditors
As far as each of the Directors is aware, there is no relevant
audit information of which has not been disclosed to the Company's
external auditors and each of the Directors has taken all of the
steps that they each ought to have taken to be aware of relevant
audit information and to establish that the Company's auditors are
aware of that information.
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