22nd Feb 2016 15:59
LONDON (Alliance News) - Mirland Development Corp PLC shares dropped on Monday after it said the value of its portfolio fell substantially in the final quarter of 2015 as a result of the ongoing impact of the Russian economy.
Mirland shares were down 6% to 70.0 pence per share on Monday afternoon.
The Russian-focused residential and commercial property developer said a preliminary valuation of its portfolio implies the value of its properties has fallen by a staggering USD63.0 million during the fourth quarter of 2015. That valuation was calculated by its independent appraiser, Cushman & Wakefield.
Overall, the change in valuation means the gross value of its portfolio is expected to have fallen to USD384.0 million at the end of December from USD483.0 million at the end of September.
"The revaluation of the company's projects and investments has occurred due to the ongoing impact of the Russian economy. In particular, Russia has seen a significant and continued devaluation of the rouble against the US dollar alongside the continued negative effect of low oil prices," said Mirland.
"There have also been recent downgrades to the Russian Federation sovereign credit rating by Standard & Poor' and Moody's. The outlook for Russia remains both challenging and uncertain," it added.
Mirland said the decrease is on a non-cash basis, and therefore doesn't impact its cash reserves. However, the valuation will impact the fourth quarter results by an equity reduction of USD65.0 million and a reduction of USD61.0 million in equity attributable to shareholders, it said.
"It should be noted that the figures presented in this announcement are estimates based on preliminary data. The preparation of the company's financial statements is currently underway and remains subject to a final review by the board and the company's auditor," said Mirland.
The property developer said the negative economic conditions means it has fallen behind on its payment of USD500,000 due to one of its banks which provides financing to one of its shopping centres, out of a total of USD1.5 million. The total loan amount provided by banks against the company's subsidiaries' yielding assets is USD240.0 million.
"Currently, the company is negotiating with its banks in order to restructure the loans provided to the company's subsidiaries," said Mirland.
Despite the difficult market conditions, Mirland said it has maintained a "generally positive operating performance" in rouble terms and has seen a relatively high average occupancy of above 86% in its yielding assets. In addition, sales at the company's flagship Triumph Park development have continued at a moderate pace, with 644 units sold in 2015.
Lastly, Mirland said the discussions with bondholders regarding the proposed restructuring plan remains ongoing, and said further updates will be released in due course. Mirland expects to release its full year results for 2015 on March 16.
By Joshua Warner; [email protected]; @JoshAlliance
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