Adams Regulatory News (ADA)

2 Apr 2007 07:04

Dawnay, Day Carpathian PLC02 April 2007 DAWNAY, DAY CARPATHIAN PLC ("DDC" or "the Company"), Announcement of project funding and agreement to purchase a majority shareholding in a premier shopping centre project in Riga, Latvia. DDC full investment target reached Highlights: • Agreement to acquire 55% stake in Galleria Patollo shopping centre in Riga, Latvia • DDC providing up to €42 million of equity to the project • Premier shopping centre with up to 220 shops and restaurants, covering 41,000 sq m • Construction commences in June 2007 and completion is expected by October 2009 • Prime retail rents in Riga below regional average - significant scope for growth • DDC has now reached its full investment target Dawnay, Day Carpathian PLC the retail commercial property investment companyestablished to invest in Central and Eastern Europe, is pleased to announce thatit has agreed the purchase of a 55% stake on completion of the development ofthe Galleria Patollo shopping centre in Riga, Latvia. The development partnerand vendor is Titan Invest A/S, a Danish real estate company with over 7 yearsexperience of working in Latvia. Following this investment, DDC has reached itsfull investment target set at IPO and is considering its funding options, withthe intention of continuing to maximise the future growth of the Company. Under the agreement, DDC is committed to provide staged, conditional payments of£21.8 million (€32 million) of equity to partially fund the project, and isexpecting to also invest up to a further £6.8 million (€10 million) during theproject period. All of the investment will earn attractive priority interestaccruing against the completion price. DDC's equity investment and accruedinterest thereon will be secured against the seller's substantial site value Aproject debt finance facility has also been agreed with Nordea Bank. On completion, DDC will have secured a 55% stake in the centre at an agreedinitial yield of 8% based on achieved Net Operating Income. On or nearcompletion, the partners intend to realise a significant uplift in value asrecognised by the market for such prime completed projects. Construction of the shopping centre is expected to commence in June 2007 and becompleted by the third quarter of 2009. Currently the vendor has completed siteassembly for the main part of the scheme. There is also an opportunity to expandthe scheme by incorporating two additional buildings into the shopping centre.The enlarged scheme will comprise 220 shops and restaurants, 41,000 sq m ofretail space and 175 underground parking spaces. The site is ideally located in a prime location in the commercial centre of Riga. Given the quality of the location and the critical mass of the scheme,Galleria has the potential to become the leading fashion shopping centre inLatvia. In Cushman & Wakefield's "Marketbeat Europe Annual Review 2006/7", Riga wasshown as currently having the second lowest prime retail rent of any Europeancapital city. Riga's prime retail rent level is below that of its Balticneighbours, Vilnius and Tallinn, therefore indicating excellent scope for growthand yield compression. In July 2005, DDC was admitted to AIM and raised gross proceeds of £140 million.As a result of today's announcement, the Company has now reached full investmentwith over 90% of its funds invested or committed. On 1 February 2007, the Directors announced that, barring unforeseencircumstances, it was the Company's objective to recommend a total dividend ofapproximately 10p per share following full investment of the fund for the 12months to 31 December 2007. This remains the Company's objective and reflectsthe Directors' intention to continue to provide investors with substantialdividends in addition to the confirmed potential for capital growth. In thisregard the Board is pleased to confirm that it now also targets 10p per sharefor the year ending December 2008. This reflects the strong underlying cashflowsassociated with the Company's portfolio and the flexibility now available to theCompany to advance cashflows as a consequence of refinancing opportunities. The potential for capital growth was reflected in the announcement of 12 March2007 which indicated that the unaudited net asset value per share (adjusted toexclude goodwill and any deferred tax liabilities arising on the propertyvaluations) had risen to 126.7p from 98.2p, an increase of 29%. The pipeline of potential future transactions remains strong and nowsignificantly exceeds the residual liquidity remaining within the Company. Inaddition, as was noted in the recent trading update made on 1 February 2007, anumber of development opportunities exist which the Company is seeking topursue. Overall, the Directors' objective is to ensure that the Company isable to maintain the existing positive momentum. Commenting on this announcement, Rupert Cottrell, Chairman of Dawnay, DayCarpathian said: "We are delighted to report the Company has reached fullinvestment. Our strategy remains focused on acquiring income producing retailassets with excellent growth potential in Central and Eastern Europe. Togetherwith identifying asset management and regeneration opportunities in our targetcountries to which we can apply our expertise to generate cashflow and capitalgrowth. We also intend to partner with experienced local developers where we seeopportunities like Riga, for significant returns with minimal development risk." Enquiries: Dawnay, Day Panterra Peter Klimt 020 7834 8060 Paul Rogers Balazs Csepregi Numis Securities Andrew Dawber 020 7260 1000 Bruce Garrow Anthony Richardson Cardew Group Tim Robertson 020 7930 0777 Catherine Maitland This information is provided by RNS The company news service from the London Stock Exchange