Alpha Real Regulatory News (ARTL)

25 Mar 2008 07:01

Alpha Tiger Property Trust Limited25 March 2008 25 March 2008 Alpha Tiger Property Trust Limited ALPHA TIGER TO CO-DEVELOP 1.2 MILLION SQUARE FEET BUSINESS PARK-LED SPECIAL ECONOMIC ZONE (SEZ) IN NOIDA Highlights • 1.2 million square feet business park-led development in SEZ within NOIDA, a high growth office market in the National Capital Region ("NCR") of India • £14.7 million equity commitment • Site ideally located to take full beneficial advantage of rapid growth in demand for business space from IT and IT Enabled Services companies • Transaction expected to deliver high total returns to shareholders • Experienced local partner • Development expected to be completed in phases within 36 months • Alpha Tiger has now conditionally committed approximately 93% of the net equity proceeds raised at flotation Introduction Alpha Tiger Property Trust Limited (the "Company" or "Alpha Tiger") is delightedto announce that it has successfully agreed to acquire a 50 per cent. interestin a Special Purpose Vehicle ("SPV"), IT Infrastructure Park Private Limited,which will develop an IT/IT Enabled Services ("IT/ITES") SEZ on 11.2 acres ofland in NOIDA, in the National Capital Region ("NCR") of Delhi, India. TheCompany will invest in partnership with Logix Group ("Logix"), one of theleading developers of business parks in North India, who will retain ownershipof the residual 50 per cent of the SPV. The SPV will develop approximately 1.2million square feet of business park-led space. The SPV has an agreement to sub-lease 45 per cent. of a larger 24.8 acre plotwhich was originally leased to Sarv Mangal Realtech Pvt Limited ("Sarv Mangal")from NOIDA on a 90 year lease. Development of an SEZ has been formally approvedby the Indian Government's Board of Approval. The SPV has also executed aco-development agreement with Sarv Mangal, providing equivalent developmentrights and benefits. Alpha Tiger has committed INR 1147 million (£14.7 million) to acquire a 50 percent. equity interest in the SPV which sub-leases the land and will undertakethe development for an aggregate construction cost of c. INR 2100 million (£26.9million). The Development Under the SEZ regulations prescribed by the state government (Uttar Pradesh),the land plot can be subdivided and sub-leased by the owner, being Sarv Mangal,to the co-developer of the SEZ, being the SPV. The SPV and Sarv Mangal will prepare an integrated master plan for the SEZ sitealthough the subsequent design and construction within each zone shall beexecuted independently by either party. The total area of the sub-leased land is approximately 11.2 acres with theproposed development of approximately 1.2 million sq ft of landmark officedevelopment together with the provision of other support facilities, includingpotentially retail, non-IT offices, serviced apartments and hotels. It isanticipated construction will be completed in phases with the entire developmentcompleted within 36 months. Location NOIDA is a large planned surburban township located South-East of Delhi, withinthe NCR. Given NOIDA's proximity to Delhi (15km to Delhi CBD), the area hasevolved into an established location for IT/ITES businesses seeking a large poolof skilled resource, with over 1 million people residing in NOIDA and a further7 million people within the catchment area. The site is located at Sector-140a within the NOIDA Master plan 2021 and iscategorised as an industrial/SEZ zone on which IT/ITES office and support usagesare permitted. The site is situated just off the main NOIDA Expresswayconnecting Noida with the township of Greater NOIDA, which itself is developingas a residential and institutional satellite for NOIDA. The SEZ site is well-located for large-scale IT and ITES companies, and otherbusiness park tenants, that are expanding in the NCR. The NOIDA Expresswaylocality encompasses a cluster of technology firms and other commercialbusinesses that have been attracted by the improving infrastructure andaffordable office rents compared to other suburban locations like Gurgaon. Thegrowth of this location is also generating demand for retail and hospitalityservices, and the site is positioned to benefit from this potential demand. Transaction Structure Alpha Tiger has agreed to acquire a 50 per cent. equity interest in the SPV,which has an agreement to lease the land, and additionally will contributeequity towards the proposed construction costs. It is anticipated that thirdparty debt can be secured in respect of over 70 per cent. of the projectedconstruction costs and the residual equity requirement shall be shared equallybetween the SPV's joint venture partners. Consideration for the SPV interestand construction equity will be satisfied using the existing cash resources ofthe Company. The key terms of the investment are as follows: • Subject to certain conditions precedent (which maybe waived by the Company), Alpha Tiger will be acquiring certain shares and issued new equity in the SPV resulting in a 50 per cent. equity and voting interest. Consideration to acquire and be issued shares shall be INR 1147 million (£14.7 million); • Logix is responsible for arranging a third party loan facility to fund the proposed construction of the business park. The land will be provided as security against the loan facility. Any shortfall in funding in excess of the loan facility to complete the construction project shall be the equal responsibility of both joint venture partners. All profits of the SPV shall be distributed after the repayment of interest onany third-party loans. Alpha Tiger has a priority return of an IRR of 19 percent. on equity with subsequent upside shared with Logix. Investment rationale This investment by Alpha Tiger represents an excellent opportunity to develop ahigh grade business park in an IT/ITES SEZ in the high growth NOIDA market ofthe NCR. The development benefits from a strong local partner with a trackrecord of developing business parks within the NOIDA area. Alpha Tiger hasdeveloped a strong relationship with Logix. This is the second executedtransaction with Logix following the successful execution of a business parkdevelopment project at Sector 132, NOIDA. Alpha Tiger equity commitments This transaction, together with the equity commitment assumptions outlined inprior transaction announcements, mean that the Company now has total equityconditionally committed in excess of £67 million or approximately 93 per cent.of the net equity proceeds raised at the time of flotation. Contact: Alpha Tiger Property Trust Limited David Jeffreys, Chairman, Alpha Tiger +44(0)1481 723 450 Brad Bauman, Alpha Tiger Fund Manager +91(0) 9980 001122 Panmure Gordon, Nominated Adviser to the Company Richard Gray/Andrew Potts/Stuart Gledhill +44(0)20 7459 3600 Notes to Editors: An exchange rate of £1 = INR 78 is used in this announcement. About Alpha Real Capital LLP Alpha Real Capital is a value-adding international property fund managementgroup with operations in the Indian and other international real estate markets.Alpha Real Capital was established by Phillip Rose and Sir John Beckwith. Alpha Real Capital is the Investment Manager to Alpha Tiger. Alpha RealCapital's Indian CEO, Brad Bauman is Fund Manager to Alpha Tiger. He has 18years' experience in the real estate and finance industries, and has beenresponsible for Alpha Real Capital's Asian investment programme since 2005. Alpha Real Capital is regulated in the United Kingdom by the Financial ServicesAuthority. About Alpha Tiger Property Trust Limited Alpha Tiger is a Guernsey registered closed-ended investment company investingin and developing Indian real estate. The Company floated on AIM in December2006, raising £75m. Further information is available at www.alphatigerpropertytrust.com This information is provided by RNS The company news service from the London Stock Exchange