9th Jan 2008 07:13
Speymill Deutsche Immobilien Co PLC09 January 2008 Speymill Deutsche Immobilien Company plc ("SDIC" or "the Company") C Share Portfolio Investment Update Speymill Deutsche Immobilien Company plc (AIM: SDIC; SDCC), the pan-Germanresidential property investment company listed on AIM, announces furtherinvestments for the second tranche of funds raised ("the C Share Portfolio"). Main highlights as at 31 December 2007 are: - Residential properties in and around various German cities and towns have been notarised (i.e. committed to be purchased) for a cumulative cash consideration of approximately EUR373 million. In addition, refurbishment related costs of over EUR15.4 million are to be borne by the fund entities. - Initial net rental income, as at notarisation is expected to be approximately EUR25.8 million per annum. Furthermore, this amount will be temporarily augmented by initial rental guarantees for vacancies while certain refurbishments are being carried out. - Blended net initial property yield as at notarisation, including refurbishment costs, is thus expected to be 6.6%. This yield is anticipated to rise to 7.1% at the end of the period commencing 12 months after completion of all acquisitions, full takeover of property management and completion of refurbishments ("stabilised yield"). In addition, refurbishment costs of approximately EUR17.3 million relating toapproximately EUR132.3 million of the current notarised properties are to beborne by the sellers. Rental guarantees are in place for one year following thecompletion of those refurbishments. Taking these rental guarantees into account,the adjusted initial net rental income, as at notarisation is approximatelyEUR27.9 million. The Company has notarised 7,248 apartment block units at an overall averageprice of EUR797 per square metre. There were approximately 842 vacant units at notarisation (circa 11.6% vacancy).These include units in buildings covered by the rental guarantees refered toabove. The economic vacancy rate, adjusted for rental guarantees, isapproximately 4.7%, although this may rise temporarily following notarisationand during the refurbishment period. After contract completion and when the properties have been taken over, refurbished and are fully under management for a suitable period, the Company will target a 95% overall occupancy rate (allowing for some natural vacancy and tenant fluctuation). It is envisaged that this target will be reached in the second year after takeover. Summary C Share Portfolio Information Total Number of Units 7,248 Total Purchase Price EUR 373.4 million Average Price per m2 EUR 797 Net Rental Income EUR 25.8 million(excluding rental guarantees) Net Initial Yield 6.6%(excluding rental guarantees) Stabilised Yield 7.1% Note: The stabilised (normalised) rent represents a target income level based on a 95%of maximum rents. If not already achieved, it is envisaged that this will be reached in the second year after takeover. In the few months to one year after assuming full ownership and management, the rental income level may temporarily fall from the level at notarisation for the following reasons: - the buildings may be subject to some refurbishment which can lead to increased tenant turnover; - during the handover period between notarisation and completion, the incumbent owner may be less active in managing the property and, consequently, there may be additional vacancies that will need to be replaced through letting activity following completion; or - the building's operating/service charge costs may have to be subsidised out of rental income before a reconciliation with tenants occurs (this typically occurs in the year following takeover). Ordinary Share Portfolio The Company also announces that it completed contracts for the last of the Ordinary Share Portfolio acquisitions in November 2007. With the refurbishment program now underway, as anticipated, the Company has observed an increase in vacancy rates since the posting of Company accounts, to approximately 12% beforerental guarantees. Following the completion of refurbishments and letting activity, the vacancy rate is expected to decrease. 9 January 2008 Contact: Smith & Williamson Corporate Finance Limited +44 (0)20 7131 4000Azhic Basirov / Siobhan Sergeant Fairfax I.S. PLC +44 (0)20 7598 5368Paul Richards / James King Notes to editors: - Speymill Deutsche Immobilien Company plc is a pan-German residential property investment company which listed on AIM on March 2006, raising £170 million on admission. - In May 2007, the Company raised a further EUR250 million through a placing of C Shares which were admitted to trading on AIM on 10 May 2007. - The Company was established to invest in the German property market and, predominantly, in the residential sector. It is anticipated that once fully invested, the Company will have a balanced portfolio of properties throughout Germany. - The Company's objective is to provide Shareholders with an attractive level of income together with the prospect for long-term capital growth. - The Manager is Speymill Property Group Limited (formerly named Speymill Property Managers Limited) and the Investment Adviser is GOAL Service GmbH. The Manager and Investment Adviser are responsible for identifying new investment opportunities. - The Manager is a subsidiary of Speymill Group plc (AIM: SYG) while the Investment Adviser is a joint venture partner of Speymill Group plc (which owns 51% of the venture). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Sdic Power.