21st Oct 2005 07:00
Black Sea Property Fund Limited21 October 2005 For Immediate Release 21 October 2005 The Black Sea Property Fund Ltd (AIM: BKSA) First major investment in ski region The Black Sea Property Fund, which specialises in the financing and off-plansale of luxury holiday apartments in Bulgaria, is pleased to announce thesigning of its first major new contract in the Pamporovo mountain and ski resortarea. Highlights: •Agreement secured to finance the construction of 350 holiday apartments in Pamporovo, one of Bulgaria's fast-growing mountain and ski resorts. €47% discount to current estimated "as if built" market value. •The properties, due for completion in time for the 2007/8 ski season, are expected to be ready to sell off-plan in the coming months. •If all of the apartments are sold at the current independently estimated market value within the next 2 years, the gross IRR on Fund's investment would be 54%.* •Concept visuals for the development can be seen at www.magnolia-bg.com. Up-date on the Fund: •Second major investment secured by the Manager since the Fund's launch on AIM in March 2005. •Approximately 40% of the funds raised at launch, net of expenses, now committed on a total of 5 projects comprising 2,850 apartments. •Tourism growing strongly in a more rapidly expanding economy with EU accession on track. The Chairman of the Fund, Melville Trimble said, "Diversification into the skiand mountain resort market is in line with the Fund's stated strategy. Pamporovoboasts the longest sunshine hours of Bulgaria's mountain regions and has thepotential to develop into a year-round tourist destination. Some 40% of themonies raised by the fund at launch are now committed and negotiations on otherprojects are at an advanced stage." Further details The Black Sea Property Fund Limited (the "Fund") has signed a developmentagreement to finance the construction of 350 upmarket holiday apartments in thefast-growing resort of Pamporovo in the Rhodope mountain range, and some 50miles from the airport at Plovdiv. The Fund is managed by Development CapitalManagement (Jersey) Limited. The development, which has outline planning permission and design approval, willcomprise a total of approximately 420 apartments, including shops, a spa andrestaurants, to be built by Magnolia Homes EOOD. It is anticipated thatmarketing off-plan will commence in the coming months and that the developmentwill be completed in time for the 2007/8 skiing season. The Fund will provide initial financing of €4.6m, equal to 40% of the totalpurchase price, which will be released to the developer once final permits arein place and infrastructure supplies are secured, at agreed stages during theconstruction process. The balance of approximately €6.9m will become payable onemonth after completion of the development, although it is the Manager'sintention to sell-on the apartments prior to completion. The purchase price of €11.5m represents a discount of 47% to the estimated "asif built" current market value of the relevant properties as determined byColliers International. The Fund will be entitled to a first share of profit onthe sale of the apartments equivalent to the initial financing (i.e. €4.6m). Anyprofit generated over and above this figure will be shared with the developer70:30 (developer:Fund). This is the second major investment secured by the Manager since the Fund'slaunch on AIM in mid March 2005. Approximately 40% of the funds raised atlaunch, net of expenses, have now been committed on a total of 5 projectscomprising 2,850 apartments. The current deal flow is such that the Managercontinues to believe the Fund will be fully invested ahead of the originalschedule. Tourism remains strong, with visitor numbers rising by 6.33% for the first 8months of the year to 3.51m, after an increase of 7.5% in August alone. Touristrevenue rose a little faster, growing by 10.2% to exceed €1.0bn for the firsttime at the eight months stage. Tourists from the EU increased by 7.15%, withthose from the UK up by around 42% over the 8 month period. On the economic front, the new coalition government has just published its draftbudget for 2006, again showing revenue and expenditure in balance. The firsthalf of the current year produced a 1.0% budget surplus, whilst revenue at the 8month stage is €1bn ahead of last year. This is the result of faster thanexpected GDP growth (6.0% y.o.y in Q1 and 6.4% in Q2), growing consumerconfidence and strong EU related expenditure. According to Olli Rehn, EU accession minister, Bulgaria remains on track formembership on Jan 1st 2007. For further information please contact: Development Capital Management 020 7399 4270Roger HornettTom Pridmore Buchanan Communications 020 7466 5000Isabel Podda Numis Securities Ltd 020 7776 1500Andrew DawberCharles Farquhar * This internal rate of return (IRR) calculation is based on the assumption thatthe apartments are sold at the end of 2 years after funding at the estimatedopen market value provided by Colliers International referred to above(excluding VAT). The calculation is gross before all costs including tax andsales commission. The Directors of the Fund consider the IRR to be calculatedafter due and careful inquiry. This statement should not be taken as anassurance that the apartments will in fact be sold for the estimated valuationwithin 2 years. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BKSA.L