18th Jun 2007 07:04
Metro Baltic Horizons PLC18 June 2007 18 June 2007 Metro Baltic Horizons Plc METRO BALTIC ANNOUNCES TWO TRANSACTIONS ACROSS ITS TARGET INVESTMENT REGION WITH A TOTAL INVESTMENT COMMITMENT OF €130M Metro Baltic Horizons plc ('Metro Baltic' or the 'Company'), the propertyinvestment company focused on prime commercial and residential developmentopportunities in the capitals of the Baltic States and St Petersburg, Russia, ispleased to announce that it has entered into agreements to acquire twodevelopment properties in Riga, Latvia and Tallinn, Estonia. The grossdevelopment cost of the projects, including acquisition, construction andfinance is approximately €130m. These acquisitions follow the announcement on 8 May that the Company had enteredinto an agreement to acquire a 16,000 sq m complex, currently principallycomprising office accommodation, located on a prominent street in the centre ofSt Petersburg. The total consideration payable for the acquisitions in Riga and Tallinn is €28mwhich, together with initial working capital, will be approximately 46% equityfunded. After these acquisitions, the Company will have committed circa 65% ofthe investable funds raised by the Company in its IPO on AIM in December 2006. Details of the two acquisitions announced today are as follows: • This first property is a prominently located land plot of 1.7 hectares situated approximately 5 kms from Riga Old Town and very close to the new South Bridge. The property is well suited for modern office development, with high visibility and easy access to the City. Planning permission has been granted for the construction of approximately 50,000 sq m of gross office space together with requisite parking facilities. The proposal for the scheme involves the development of three 17-floor towers on a phased basis over a 36-month period. Construction is expected to start in spring 2008. The project has an estimated gross development cost (acquisition, construction and finance) of €105 million, of which it is estimated that up to €36m will be equity funded. • The second property is a 2,200 sq m land plot located on a high profile square in the centre of Tallinn, an area that currently commands some of the highest rents in the city. Planning has been secured for the construction of a new seven-storey building, with retail space on the first and second floors and offices on the third to seventh floors. All requisite construction permits are in place and binding bids from local and international construction companies are being assessed. Once completed, the building will comprise 8,900 sq m of gross floor space, as well as underground parking for 76 cars. It is estimated that the project will have a gross development cost (acquisition, construction and finance) of €25m, of which circa €9m will be equity funded. It is expected that construction and full lease out of the premises will be completed by early 2009. Metro Capital Management is currently managing both projects on behalf of thirdparty investors. The prices being paid by Metro Baltic have been negotiated andbased on independent valuations undertaken on each of the properties. Both ofthese acquisitions meet the Company's stated investment criteria includingtarget return, location, stage and type of development. The Company is also in advanced negotiations on two other prospectiveinvestments in the target region and expects to be able to update shareholdersin the near future. If such acquisitions were to be undertaken, the Companywould have fully committed its investable IPO proceeds. Metro Frontier Limited acts as Investment Manager to the Company and MetroCapital Management AS as Investment Adviser. Commenting on the acquisitions, Robin James, Director of Metro Baltic Horizons,said: "The property markets of Riga and Tallinn have seen considerable yieldcompression in recent years and the market prices for existing, quality,developed assets remains highly competitive. However, these markets continue tooffer significant value for well-positioned buyers with meaningful localdevelopment capabilities and we are pleased to have expanded our portfolio withthese excellent acquisitions." James Kenny, Chief Executive of Metro Frontier, added: "We are delighted with the speed at which we have been able to make these highquality acquisitions for the Company since its IPO in December 2006. We believethat the spread of investments across a number of locations, sectors and stagesof development, offers investors access to a unique and attractive portfoliowith exposure to the dynamic property markets of this fast growing region. Webelieve that the region continues to offer further significant opportunitieswhich meet the Company's stated investment criteria and we are confident of ourability to identify further prospective investments for the Board'sconsideration." For further information, please contact: Metro FrontierJames KennyTel: +353 86 3977 850 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 capital cities of the Baltic States - although principally Latviaand Estonia - and St Petersburg, Russia. The Company was admitted to AIM inDecember 2006 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 of26 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 these two assets, together with the acquisition inSt Petersburg in May this year, is a significant step for the Company as theyare all forecast to generate an internal rate of return in excess of theCompany'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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Metir Plc