1st Aug 2007 07:02
European Convergence Property CoPLC01 August 2007 1 August 2007 EUROPEAN CONVERGENCE PROPERTY COMPANY PLC ("ECPC" OR "THE COMPANY") _____________ DISPOSAL OF THREE ROMANIAN PROPERTIES The Company is pleased to announce that its wholly owned subsidiary, ECPC(Cyprus) Limited, has entered into conditional sale and purchase agreements withDEGI Deutsche Gesellschaft fur Immobilienfonds m.b.H ("DEGI") the effect ofwhich is to dispose of its three Romanian properties (the "Disposals"). DEGI isthe real estate investment company of Allianz Group and is one of Germany'sleading property managers. The Disposals take advantage of the substantial yieldcompression seen in the market over the past twelve months and, if theycomplete, will generate a substantial capital gain for the Company. The three investment properties being sold are Millennium Business Centre(purchase price, €52.6m), PGV Tower (€27.4m), and Construdava (€26.5m). Theseare all prime office locations based in Bucharest and their yields at point ofsale are approximately 6.40%, 6.55%, and 7.20% respectively. The net consideration for the Disposals will be approximately €110.5m (aftertransaction costs and adjustments of €5.5m for the net current assets of thetrading companies being sold). Final price determination will be dependent onpost closing audit. These properties were acquired for a combined cost of€89.1m, and were re-valued earlier this year at €97.5m. The Disposals areexpected to complete by the end of November 2007. After repaying the external financing of the projects the Company will be leftwith net proceeds of approximately €49.9m (prior to any adjustments for itemssuch as deferred tax and management fees), which includes a gain ofapproximately €15.9m on the initial equity investment. The consideration for the Disposals will be payable in cash. The Company doesnot intend to reinvest the proceeds of the Disposals. The Investment Manager estimates that the net impact of the Disposals should, oncompletion, lead to an increase in the Net Asset Value per share attributable tothe three properties being sold of approximately €0.15 per share when comparedto the NAV of 31 January 2007 announced on 21 March 2007. This figure assumesthe release of related provisions for deferred taxation (net impact ofapproximately €0.08 per share) which were raised at the time of the 31 January2007 revaluation, and it also includes a provision for expected performance feesdue to the Investment Manager of approximately €0.05 per share. In addition, the rental income for Construdava has recently risen appreciablyand, in line with the original sales and purchase agreement, this has triggereda further payment to the original vendor of €2.0m, representing a payment ofapproximately €0.03 per share. The increase in rental incomes has been reflectedin the proposed disposal price of Construdava. As the Disposals represent a disposal resulting in a fundamental change ofbusiness under rule 15 of the AIM Rules for Companies, the Disposals will beconditional upon, inter alia, the approval of the Company's shareholders at anExtraordinary General Meeting. A circular outlining further details of theDisposals and convening the Extraordinary General Meeting will be sent toshareholders in due course. If the Disposals complete, the Company will be left with one remaininginvestment property; Mall Veliko Turnovo in Bulgaria. Due to the substantial yield compression seen in the market, the Company doesnot intend to pursue any further acquisitions and the Directors are currentlyconsidering the methods for returning both the proceeds from the Disposals andunivested cash to shareholders in as short a time as possible. Enquiries: European Convergence Property Company plc +44 (0)1624 640200Anderson Whamond Charlemagne Capital +44 (0)20 7518 2100Christopher Fitzwilliam Lay/Varda Lotan Panmure Gordon (Broking) Limited +44 (0)20 7459 3600Hugh Morgan/Jonathan Lack/Stuart Gledhill Smithfield Consultants +44 (0)20 7903 4900John Kiely/Anne Howalt Website: www.europeanconvergence.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CCAP.L