27th Sep 2007 07:03
Metro Baltic Horizons PLC27 September 2007 27 September 2007 Metro Baltic Horizons Plc METRO BALTIC ANNOUNCES ACQUISITION OF RESIDENTIAL DEVELOPMENT PROJECT IN TALLINN - IPO Proceeds Fully Committed - Metro Baltic Horizons plc ('Metro Baltic' or the 'Company'), the propertyinvestment company focused on prime commercial and residential developmentopportunities in St Petersburg, Russia and the Baltic State capitals, is pleasedto announce that it has acquired an 80% shareholding in an asset holding companyor Special Purpose Vehicle ('SPV') that owns a 1.3 hectare site suitable forresidential development in Tallinn, Estonia. The estimated total grossdevelopment cost of the project, including acquisition, construction and financeis approximately €26m. The SPV owns a 1.3 hectare land plot in a prime area of the city overlooking theBay of Tallinn. The site is approximately 3kms from the centre of Tallinn in anarea rapidly becoming one of the city's premier residential locations. The areais currently zoned for residential development and a detailed plan has beenapproved for the site. Metro Baltic proposes to subdivide the site and reconfigure the building plansto accommodate circa 9,000 sq m of prime residential apartment space, as well asa separate development comprising a circa 3,000 sq m boutique hotel. Theproject is expected to be developed and released on a phased basis, with initialcompletion expected in 2010. This acquisition meets all of the stated investment criteria of the Companyincluding exceeding the minimum internal rate of return threshold of 25%. Following completion of this acquisition, the Company has fully committed theproceeds of its IPO. Commenting on the acquisition, Robin James, Chairman of Metro Baltic Horizons,said: "We are delighted to have acquired this site in a very prominent area ofTallinn. We believe the plot offers considerable potential for a high qualityresidential scheme which we will follow with the development of a strikingboutique hotel. With this acquisition, we have now fully invested the proceedsof the IPO in nine months of our listing on AIM." James Kenny of Metro Frontier, added: "This is another excellent acquisition in one of the very best locations inTallinn. We believe that the Company has now assembled a very strong portfolioof projects which should deliver significant returns for shareholders. Althoughthe Company has already committed its available equity funds, we continue to seesignificant quality deal flow across St Petersburg, Riga and Tallinn." The announcement of this acquisition follows an announcement by the Company inJuly 2007 that it had entered in to a Memorandum of Understanding in relation toa property development opportunity in Riga, Latvia (the 'Riga Acquisition'). Itwas stated in that announcement that all contractual matters relating to theacquisition were expected to be completed within 60 days. However, the Company'sInvestment Adviser, whilst still confident of the strong potential of thisproject, has not yet completed its due diligence on certain aspects of theproperty acquisition to its satisfaction. It should be clarified that theCompany has no contractual commitment to complete the Riga Acquisition and hasnot paid any deposit or down payment and consequently, the cost of any possibledisengagement would be negligible. On completion of the acquisition announced today, the Company will be fullyinvested and, as funds which had been reserved for the Riga Acquisition have nowbeen utilised, it is possible, assuming satisfactory completion of its duediligence, that if the Company wishes to pursue the Riga Acquisition it will beeither in joint venture with third party investors or by the raising ofadditional funds. Metro Frontier Limited acts as Investment Manager to the Company and MetroCapital Management AS as Investment Adviser. For further information, please contact: Metro FrontierJames KennyTel: +353 86 3977 850 Oriel SecuritiesTom DurieTel: +44 (0) 20 7710 7600 Financial DynamicsStephanie Highett/Nicole MarinoTel: +44 (0) 20 7831 3113 Notes to Editors Metro Baltic Horizons (ticker code: MET.L) is a property investment companytargeting the cities of St Petersburg, Russia and the Baltic State capitals ofRiga, Latvia and Tallinn,Estonia.The Company was admitted to AIM in December2006 raising €39m gross. The Baltic States are amongst the fastest growing economies in Europe and StPetersburg is regarded as one of the top investment locations in Russia.Combined, this represents a strategically located region with developed andimproving business, trading and political links. The Investment Manager will source and recommend suitable property developmentopportunities to the Company principally in the office and residential sectorsand expects to target development projects which can demonstrate an ability togenerate a minimum internal rate of return to the Company of 25%. The Investment Adviser is an experienced and fast growing property asset managerand developer with offices in Riga, Tallinn and St Petersburg. It has a team of30 experienced professionals managing a portfolio of 21 projects across theregion. Office vacancy rates in Riga and Tallinn are still in low single digits anddemand for prime residential developments remains robust. In this context, theacquisition by the Company of this asset, together with the acquisition in StPetersburg in May and in Tallinn and Riga in June this year, is a significantstep for the Company as they are all forecast to generate an internal rate ofreturn in excess of the Company's targeted minimum of 25%. Riga, the capital of Latvia, has a population of circa 730,000. Latvia was thefastest growing economy in European Union in 2006 recording a GDP growth rate of11.9% compared to an EU (27) average of 2.9%. Growth rates are forecast to stayat high levels with an average annual GDP growth rate of 7.7% forecast through2010. Tallinn, the capital of Estonia, has a population of circa 400,000. Estonia isthe most economically advanced of the Baltic States and has amongst the highestlevels of GDP per head of any of the recent EU entrants. In 2006, Estonianeconomic growth reached 11.4%, a record level since Estonia's independence in1991, driven principally by domestic demand. GDP growth of 8.6% is forecast for2007. St Petersburg is the fourth largest city in Europe with a population of 4.6m.Theformer capital of Russia, it is located 140kms from the Estonian border and isthe administrative capital of North West region. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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