10th Jun 2016 14:47
LONDON (Alliance News) - Secure Property Development & Investment PLC on Friday said Swiss food giant Nestle SA plans to terminate its rental contract for the Innovations Logistics Park in Bucharest, which currently generates "less than 15%" of Secure Property's annualised income.
The annualised rental income figure includes the Terminal Bovary property, the conditional sale of which was announced on June 9, Secure Property said in a statement.
The South Eastern European focused property and investment company said it is in talks with Nestle in Romania, after it was notified that Nestle plans to terminate its rental contract for the Bucharest logistics park, which was due to expire in 2018. This follows restructuring plans for Nestle's ice cream division, Secure Property said.
The termination is expected to result in a settlement being paid to Secure Property by Nestle, the statement said. "The logistics park has an existing sale and leaseback agreement in place with Piraeus Bank Leasing and as a result any final settlement requires their agreement on the allocation of funds to be received from Nestle as part of the expected amicable settlement," Secure Property said.
While discussions are taking place with Piraeus, Secure Property said payments of rent by Nestle and instalments due under the sale & leaseback agreement by Secure Property are currently suspended.
Secure Property said it "expects that a settlement will be reached that is satisfactory to all parties, details of which will be provided when concluded, as well as an update on progress being made to secure future tenants for Nestle's space in this asset which is located at the ring road of Bucharest".
When Secure Property bought the property in 2014, at which point Nestle was the anchor tenant, it said the acquisition would increase its annual net operating income by more than 60%.
Shares in Secure Property were untraded on Friday, having last traded at 15.90 pence.
By Hannah Boland; [email protected]; @Hannaheboland
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