9th May 2007 12:00
Black Sea Property Fund Limited09 May 2007 For Immediate Release 9 May 2007 The Black Sea Property Fund Limited Further land acquisition, resolution of claim and trading update The Black Sea Property Fund Limited is pleased to report on progress to 9 May2007. Key points • Significant new land acquisition in Borovets region. • Restitution claim at existing Borovets site resolved. • €47 million of equity invested (excluding construction equity), representing 77% of net assets. An additional €2 million reserved for construction finance. • A diverse portfolio consisting of developments in the ski regions, on the Black Sea coast and in Sofia. • Focus turning to executing existing investments and maximising sales. New land purchase at Borovets The Fund is pleased to announce the signing of a conditional preliminary contract to acquire development land in the area of Borovets. The total purchase price is €10,536,685. Completion of the purchase is conditional on planning permission being received and further legal due diligence being completed. Borovets is Bulgaria's oldest winter resort and is located 61 kilometres from Sofia. There are plans to expand and update the resort as part of the Super Borovetsproject and, given recent investments in the region by other significant investors, the Manager believes the area has good potential. The Fund expects to commit total equity of around €11.5 million (including the land purchase). The total development cost (including the land purchase) is expected to be in the region of €55 million. Current "as-built" sale prices, basedon comparable properties selling in the region, are estimated by the Manager at €1,150 per square metre including VAT, giving a gross development value for theresidential element of the development of €70 million. The associated commercial and hotel elements of the site add a further estimated €12 million, giving a gross development value for the entire site in the region of €82 million. The Fund intends to develop the land in planned phases into a residential resort complex with associated commercial space and a hotel, for which the Manager will seek to procure a well respected operator. Construction will be financed primarily through a debt finance facility with a local bank, together with deposits from off-plan sales. Resolution of dispute at original Borovets site The Fund is pleased to report that it has resolved the complications relating to its original investment at Borovets. This site was affected by a third partyrestitution claim and, whilst the Fund had received a legal opinion that the claim has no merit, the time required to correct this by going to court meant that proceeding with the site was not attractive. The Fund has therefore agreedto exchange that plot of land for another site in the same area. This site comprises up to 40,500 square metres of development land, the exact size depending on the detailed zoning plan that will be put in place prior to completion.The purchase price is €85 per square metre of land, equal to a maximum of €3,442,500. The deposit paid by the Fund for the original Borovets site will be credited against the purchase price. The price secured for this site, at €85 per square metre, is €3 per square metre less than that agreed for the Fund's original Borovets site and is, in the Manager's opinion, better located. Completion of the purchase is conditional, amongst other things, on planning permission being obtained and meeting certain minimum standards. Portfolio Update The Fund is currently financing four developments by third party developers and has acquired or invested in land for development in three further locations. The portfolio is well diversified, consisting of developments in two ski regions (Borovets and Pamporovo), on the Black Sea coast and in the capital Sofia. The level of each investment is set out in the tables below. Third party developments +----------------+----------+----------+--------------+-----------------+| Development |Build Area|Number of | Cash |Potential profit || | | Units | investment | at Colliers || (financings) | (m2) | | | valuations* || | | | • | || | | | | • |+----------------+----------+----------+--------------+-----------------+| Obzor | 27,050 | 257 | 5,274,750 | 5,400,000 || | | | | || (Black Sea | | | | || coast) | | | | |+----------------+----------+----------+--------------+-----------------+| Kavarna | 24,798 | 230 | 4,649,625 | 3,800,000 || | | | | || (Black Sea | | | | || coast) | | | | |+----------------+----------+----------+--------------+-----------------+| Magnolia | 24,319 | 348 | 5,612,825 | 5,100,000 || | | | | || (Pamporovo ski | | | | || region) | | | | |+----------------+----------+----------+--------------+-----------------+| Nikea Park | 8,013 | 118 | 4,006,604 | 500,000 || | | | | || (Black Sea | | | | || coast) | | | | |+----------------+----------+----------+--------------+-----------------+| | | | | || | | | | || Total | | | 19,543,804 | 14,800,000 |+----------------+----------+----------+--------------+-----------------+ * The figures in the table are based on all of the units financed by the Fund being sold at Colliers International's valuations as at 30 March 2007. If these profits areachieved on these developments, it would equate to 4.0 pence per share (at an exchange rate of €1.4707 to £1). This should not be regarded as a profit forecast since it assumes the sale of all units at the third party valuation, which may not occur. Potential profit figures assume likely sales costs and 15% tax. The figures for Obzor and Kavarna assume that the 90% IRR cap applicable to those investments is notbreached. Land investment/purchases +------------------+-----------+--------------+--------------------------+| Land investment/ | Estimated |Purchase price| Current land valuation || purchases | number of | /investment | || | Units if | value | • || |developed* | | || | | • | |+------------------+-----------+--------------+--------------------------+| Byala | Up to 622 | 9,709,200 | 16,020,180 || | | | ||(Black Sea coast) | | | |+------------------+-----------+--------------+--------------------------+| Malinova Dolina, | Up to 215 | 4,000,000 | 4,000,000** || (Sofia) | | | |+------------------+-----------+--------------+--------------------------+| Borovets ski |Up to 1301 | 13,979,185 | 13,979,185** || region | | | || | | | || | | | |+------------------+-----------+--------------+--------------------------+| Total | | 27,688,385 | 33,999,365 |+------------------+-----------+--------------+--------------------------+ \* The numbers of units to be built if the sites are developed are based on current zoning requirements and the Manager's expectations and are calculated based on an average unit size of 80m2. ** These sites were acquired in the last three months and are currently valued at cost. Sales pipeline The Manager is working to ensure that a steady stream of the Fund's units is brought onto the market. The table below illustrates the actual and expected release dates for thevarious developments. +--------------------+-----------------------+------------------------+| Development | Number of units | Anticipated or actual || | | start of marketing || | | |+--------------------+-----------------------+------------------------+| Magnolia | 348 | September 2006 |+--------------------+-----------------------+------------------------+| Obzor | 257 | November 2006 |+--------------------+-----------------------+------------------------+| Nikea Park | 118 | May 2007 |+--------------------+-----------------------+------------------------+| Kavarna | 230 | July 2007 |+--------------------+-----------------------+------------------------+| Sofia | Up to 215* | October 2007 |+--------------------+-----------------------+------------------------+| Borovets | Up to 1301* | Q2 2008 |+--------------------+-----------------------+------------------------+| Byala | Up to 622* | Q3/4 2008 |+--------------------+-----------------------+------------------------+ *estimated based on average unit size of 80m2. 61 units have been reserved at Obzor (approximately 50% of the units released for sale to date). Sales at Magnolia have been suspended while the developer negotiates a potential bulk sale of the entire development. The Fund expects to announce its preliminary results for the year ended 31 December 2006 on Thursday 10 May 2007. List of contacts Development Capital Management 020 7355 7600 Roger Hornett Andrew Mitchell Buchanan Communications 020 7466 5000 Charles Ryland Isabel Podda Numis Securities Ltd 020 7260 1000 Bruce Garrow Iain McDonald This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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