21st Mar 2006 11:30
Black Sea Property Fund Limited21 March 2006 For immediate release 21 March 2006 The Black Sea Property Fund Significant land investment at Byala The Black Sea Property Fund Limited (the "Fund"), which specialises in thefinancing and sale "off-plan" of luxury holiday apartments in Bulgaria, ispleased to announce a significant land investment in Byala, 50kms south of Varnaon the Black Sea Coast. The Fund is managed by Development Capital Management (Jersey) Limited (the"Manager"). Highlights •Eu8.6m investment in 143,314 square metres of land at Byala (Eu60 per square metre). This represents a 20% discount to the valuation of the land prepared by Colliers International at Eu75 per square metre on a market comparison basis. •The owner of the land, The Bulgarian Property Investment Trust ("BPIT"), intends to develop the site into a luxury apartment complex. When construction starts, the investment will be converted into a 30% deposit on the units to be built at a fixed price of Eu650 per square metre (excluding VAT). BPIT is also the developer of the Fund's investments at Shabla and Kavarna. •Colliers International valued the Fund's other apartment investment in Byala on an "as if built" current market price of Eu1,025 per square metre (excluding VAT) indicating an entry price discount of up to 37%. •On the sale of the units, the Fund will take the first tranche of the net sale proceeds equal to 25% of the Fund's financing price (Eu162.5 per square metre) and share the balance in the ratio 70% to BPIT/30% the Fund. •On completion of the investment the Fund will be approximately 80% allocated for investment. The Chairman of the Fund, Melville Trimble said. "The Manager is of the viewthat the Byala area is one of the most promising on the Black Sea coast and assuch the Board is pleased to see a further commitment to finance constructionwith an existing partner". Details Under the terms of the agreement, the Fund has invested in a total of 143,314square metres of land (the "Site") owned by The Bulgarian Property InvestmentTrust ("BPIT") for a total of Eu8,598,840. This represents a price of Eu60 persquare metre, a 20% discount to the open market valuation of the land preparedby Colliers International (Eu75 per square metre) on a market comparison basis. BPIT is the owner of land at Kavarna and Shabla, over which the Fund hasexisting options (see Note below). On completion of the investment the Fund willbe approximately 80% allocated for investment. The investment is structured in the form of a loan in order to simplify thedevelopment process. The loan has been secured by a first charge over the Site.In addition, the Fund has the right to demand repayment of the loan should theproject not move forward within 2 years and may either sell the Site or developthe project separately. BPIT plans to develop the Site, together with other adjoining land owned byBPIT, into a major luxury holiday complex. The Fund and BPIT will, whenconstruction starts, convert the loan into financing equal to 30% of the valueof the units to be built at a fixed valuation of Eu650 per square metre. TheFund's earlier development at Byala has been valued by Colliers International asat 31 December 2005 on an "as if built" current market price of Eu1,025 persquare metre (excluding VAT), which indicates a discount of up to 37% for thenew investment. On the sale of the units, the Fund will take the first tranche of the net saleproceeds equal to 25% of the Fund's financing price (Eu162.5 per square metre)and share the balance in the ratio 70% to BPIT/30% the Fund. For further information please contact:- Development Capital ManagementRoger HornettTom Pridmore020 7399 4270 Buchanan CommunicationsCharles RylandIsabel Podda020 7466 5000 Numis SecuritiesCharles Farquhar020 7776 1500 Note: As referred to in the initial prospectus for the Fund dated 21 February2005, the Manager acts as investment adviser to Rainbow Investments (Jersey)Limited, the Jersey-incorporated holding company of BPIT and receives a flatrate annual fee in this capacity. Certain employees of the Manager's group aremembers of the managing or supervisory boards of BPIT. Investment negotiationsand the decision of the Fund to invest were undertaken on an arms length basisand neither the Manager nor its employees received any additional performancebased remuneration from Rainbow or BPIT in respect of this transaction. RogerMaddock, as non-executive chairman of the Manager, abstained from the vote ofthe Board of the Fund to approve the investment. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BKSA.L