Fusion Antibody Regulatory News (FAB)

15 Dec 2006 07:58

Fabian Romania Property Fund Ltd15 December 2006 Not for release, publication or distribution in, or into, the United States, Canada, Australia, the Republic of Ireland or Japan 15 December 2006 Fabian Romania Property Fund Limited First property fund on AIM to focus exclusively on Romania €40 million of new funds (before expenses) raised by Shore Capital Fabian Romania Property Fund Limited (the "Fund") is pleased to announce itsadmission ("Admission") to the AIM market of the London Stock Exchange (ticker:FAB) following a successful placing with institutional investors of 29,629,630ordinary shares at €1.35 per share, raising approximately €40 million beforeexpenses (the "Placing"). The market capitalisation at the placing price onAdmission will be €68.6 million. Dealings in the shares are expected to commencethis morning at 8.00am KEY POINTS: • The Directors believe that the Romanian property market offerssignificant opportunity, for the following reasons: - There is a shortage of Western standard commercial and residential property,especially in the capital, Bucharest; - Currently yields on commercial property are typically between 7.5-9.0%,offering a favourable premium when compared with investment opportunitieselsewhere in Central and Eastern Europe; - Romania has enjoyed six successive years of economic growth, attendantrising levels of household incomes and increasing levels of foreign investment; - Romania's imminent entry to the European Union in January 2007 is expectedto provide further impetus to its economy • The Fund's investment record thus far has been impressive, with theportfolio recently valued at approximately €48.0 million (before any associateddebt) as compared with a total of €35.6 million originally invested to purchasethe portfolio less than two years ago. This gives the Directors grounds foroptimism as to further performance. • There is a lengthy pipeline of further good quality investmentopportunities available to the Fund. Commenting, Mark Holdsworth, Director said: "The Property market in Romania offers an excellent opportunity for investorsfrom the UK and mainland Europe. Romania's continued period of strong economicgrowth, political stability and impending accession to the EU in 2007 combine tooffer stable and attractive long term conditions for investment. Demand forWestern standard property has appreciated significantly across all sectors andwe believe that the shortfall in supply will offer continued opportunities forthe Fund. The Fund has a strong and proven track record of past investment, withan appreciation of 44% in 15 months. Since commencing operations in Romania, theFund has established a good reputation in the real estate marketplace and anexcellent network of contacts for sourcing a variety of opportunities for futureinvestment. We hope that these factors will stimulate investor confidence." Fabian Romania Property Fund Limited The Fund was established in 2005 as a vehicle to invest in property-relatedopportunities in Romania, taking advantage of the country's economic growth andits impending accession to the European Union in January 2007. In 2005, the Fund initially raised approximately €21.2 million, more than €17million of which has been invested in four ventures. Two of these are nowincome-producing and the Fund's property portfolio has recently been valued atapproximately €48 million (before any associated debt). The Fund is now seeking further funding to take advantage of a strong pipelineof new projects, including Class A offices, logistics and hotel units,residential and hypermarkets. The Market Opportunity The Fund intends to generate attractive total returns through a balancedportfolio of income producing buildings, co-development projects and landinvestments. The Fund will focus on the following areas of the Romanian propertymarket: 1. Commercial property market The Fund intends to continue to invest in the office sub-sector of the marketthrough both the purchase of income producing buildings as well as participationin co-investment developments. The Directors believe yields on office buildings,currently at between 7.5-9.0 per cent in Bucharest, are attractive and remain ata premium to neighbouring Eastern European countries already within the EU. TheDirectors believe that this gap will close as Romania enters the EU and aseconomic growth continues, thereby offering yield compression and a superiorcapital return profile. The Fund will continue to acquire Class A officebuildings but, in order to maximise purchase yields, former communist era officebuildings in need of renovation may also be considered. The Fund will also look to forward purchase suitable office buildings, therebyachieving higher acquisition yields. Yields for such buildings are usually at asubstantial discount to ready for sale Class A office buildings and may alsooffer opportunities to improve value through active asset management.Acquisitions of office buildings in the main regional cities will also beconsidered if appropriate. The Fund will target buildings with a value of up toapproximately €60 million that have multinational or large Romanian companies ascurrent tenants. The Directors also envisage a greater emphasis on co-investment developmentprojects than in the past, as more projects become available. The Directorsbelieve such projects can offer enhanced returns through exposure to developmentmargins, as well as providing the Fund with pre-emption rights over its jointventure partner's stake, thereby securing further investment opportunities forthe Fund at a lower transaction cost. 2. Retail market In Bucharest, there are currently only three modern shopping centres to serve apopulation of approximately two million inhabitants with increasing disposableincome. Approximately twenty million Romanians live in the rest of the countrywhere only a further two modern shopping centres and a handful of hypermarketsare located. Several developers are seeking to break into this market throughschemes to develop hypermarket galleries, shopping centres or retail parks. TheFund will seek to generate attractive returns by investing in co-investmentopportunities with joint venture partners to develop such schemes and acquiringfully let retail freeholds made available for sale by developers. The Fund willfocus, in particular, on shopping centres and hypermarket freeholds, purchasing themeither in advance at a suitable discount to market yields or at practicalcompletion. 3. Residential market The Directors believe that there will be significant demand for affordable ''western-style'' apartments over the next two to four years. It is the Fund'sintention to continue to target this segment with co-investment partners,investing in development schemes producing smaller apartments of 75-120 sqmwhich should be affordable to the emerging middle class. 4. Logistics and hotels markets The Directors believe the logistics and hotels markets now offer suitableinvestment opportunities and portfolio diversification. Income producingbuildings offering yields at a discount to prime office and retail will betargeted as they are put up for sale by developers. Opportunities to co-investwith development partners will also be sought in order to enhance risk adjustedreturns. 5. Land bank The Fund may also invest in selected land plots as these investments can offerattractive returns and may be used to facilitate co-investment projects. Ifsuitable opportunities arise, the Investment Manager will put together adevelopment scheme and invite a co-investment partner to develop the project.This may enable the Fund to achieve more advantageous joint venture terms with apartner, and may, if planning consents are achieved prior to the conclusion of ajoint venture agreement, result in an uplift in the value of the land onceplanning consent is achieved. Current portfolio Fabian Romania Property Fund currently has four investments, all of which arelocated in Bucharest: Property Fund purchase Value to Fund implied by DTZ Unrealised uplift implied by consideration Echinox's valuation DTZ Echinox's valuation €000 €000 €000 Banu Antonache 12,295 14,100 1,805Cascades 12,222 13,200 978New Town 5,750 12,260 6,510Lake View 5,300 8,459 3,159 ___ ___ ___Sub-Total 35,567 48,019 12,452 Romania Romania is the largest country in south Eastern Europe and the fourth largestcountry in Eastern Europe by population after Russia, Ukraine and Poland. It hasa population of 22m inhabitants which makes it the size of the Czech Republicand Hungary combined. Located in the Balkan peninsula, it shares borders with Hungary and Serbia tothe west, Ukraine and Moldova to the north east, Bulgaria to the south and theBlack Sea to the south east. The capital city Bucharest has a population of approximately 1.9 million and isthe administrative, political and cultural centre of the country. The cityaccounts for c.21% of the country's GDP. Romania became a member of NATO in 2004 and will accede to the EU on 1 January2007. Recent Economic Performance Since 2000, Romania has made significant economic progress through structuralreform, privatisation and tight monetary and fiscal policies. In the period1998-2006, the country's total exports grew from $8.3 billion to an estimated$32.3 billion. The country has enjoyed six successive years of economic growth from 2001-2006. Romania saw growth of 4.1% GDP in 2005 and expects growth of 6.7% in 2006,making it one of Europe's fastest growing economies. Inflation fell from 40.6% in 1998 to 8.6% in 2005 and it is expected to fall to7.0% by the end of 2007. Foreign direct investment has increased significantly in recent years, growingto $6.9 billion up from $2.7 billion in 2003, and the government has announcedthe acceleration of the privatisation timetable, which should draw in furtherforeign direct investment. The emergence of a more affluent middle class, predominantly in Bucharest, whichhas increasing purchasing power, has stimulated the demand for Western standardproperty. The Property Market There is currently a chronic shortage of Class A retail space, modern retaillocations and western standard accommodation. This represents a significantopportunity for investors. Currently, yields on Romanian commercial property are typically between7.5-9.0%, offering a favourable premium when compared with investmentopportunities elsewhere in Central and Eastern Europe. The associated risks ofinvestment in the sector can be reduced by focusing on multi-national tenants,ensuring that deals are conducted in Euros and working with reliable developmentpartners with equal equity stakes. Investment manager The Fund has appointed Fabian Capital Limited to act as its investment manager.The Managing Director and key senior employees of Fabian Capital are as follows: Mark Holdsworth (35), the Managing Director of Fabian Capital, has more thaneleven years' experience in Romania and emerging markets, having worked foreight years with ING Barings, a member of the ING group. During this period, hetraveled extensively to Romania, building up a network of contacts in thebanking, business and government sectors. In 2001, he was Managing Director, incharge of the group's equity, broking and trading operations in Eastern Europe,South Africa and Latin America. In 2003, Mr Holdsworth left ING Barings topromote his property and business interests on a full time basis. He was anon-executive director of Netia SA, Poland's largest alternative telecomsoperator, between 2004 and 2006. He is currently a non-executive director of XXICentury Investments Public Limited, one of Ukraine's leading propertydevelopment firms which was admitted to AIM on 16 December 2005. Mr Holdsworthhas over 12 years' property market experience, including residential andcommercial developments. He graduated with a degree in History from theUniversity of Edinburgh in 1994 and a postgraduate degree in Political Sciencefrom the University of Pennsylvania, where he was a Thouron Scholar, in 1995. Mark Owen (43) was a director of ING Real Estate until June 2006, when he joinedthe Investment Manager. He has 20 years' experience in commercial property,including development, leasing and asset management, in the UK and Europe. Priorto this, he worked as a Senior Property Manager at Ladbroke Group plc,responsible for its large UK portfolio of investment properties across the UK.He also has experience of acquiring retail units for a variety of high streetretailers and has worked for a number of Commercial Agency practices both inLondon and the Thames Valley. He is a member of the Royal Institute of CharteredSurveyors, having been a Chartered Surveyor since 1988. Graham Atkinson (37) was, between 2003 and 2006, a Group Finance Manager atBerkeley Group Holdings plc. Prior to this, he worked as an Investment Bankerwith Dresdner Kleinwort Benson and Citigroup (formerly Schroder Salomon SmithBarney), where he specialised in mergers and acquisitions. He qualified as aChartered Accountant with Arthur Andersen in 1996 and graduated with a Master'sDegree at Cambridge University in 1993. Board of Directors The directors of the Fund are: Mark Holdsworth - (please see above) Jaroslav Kinach (60) has been appointed non-executive Chairman, conditionallyupon Admission and subject to formal approval by the Jersey Financial ServicesCommission. Since 2003 Mr Kinach has been an executive director of XXI CenturyInvestments Public Limited. Previously Mr Kinach was an adviser to the PrimeMinister of Ukraine. From 1995 to 1999 he headed the Office of the European Bankfor Reconstruction and Development in Ukraine. Prior to this he gained extensiveexperience in financial services during his 20 year career with the TorontoDominion Bank, one of Canada's top commercial banks. Mr Kinach holds a Master ofBusiness Administration degree from the Graduate School of Business of ColumbiaUniversity in New York. Nigel Le Quesne (45) is the Managing Director of the Jersey Trust Company Groupof companies (the ''JTC Group''). He is a Fellow of both the Institute ofChartered Secretaries and Administrators and the Chartered Management Institute.Mr Le Quesne has a number of directorships of both publicly quoted and privatecompanies and has extensive property experience. Stephen Burnett (46) is the Finance Director of the JTC Group having joined in1997, having previously been employed by BDO Carnaby Barrett. He is a Fellow ofthe Association of Chartered Certified Accountants. Mr Burnett sits on the Boardof a large number of companies, including property companies and funds. Philip Burgin (37) is a director of the JTC Group having joined in 1995 fromMorgan Stanley. He is a Fellow of the Institute of Chartered Secretaries andAdministrators and holds a postgraduate diploma in Management Studies. Hisexperience in property is extensive, including the launch of a Jersey basedMayfair Real Estate Fund. Nigel Syvret (44) is a director of the JTC Group having been previously employedby Price Waterhouse. Mr Syvret is a member of the Institute of CharteredSecretaries and Administrators and, since March 1999, a member of the Society ofTrust and Estate Practitioners. Antony Hillman (50) has been appointed as a non-executive Director,conditionally upon Admission. He is the Non-Executive Chairman of the JTC Group.He is a founding shareholder of the JTC Group. He was a partner of Crills, aJersey law firm until 2002, and a Jersey resident partner of Holman Fenwick &Willan (Jersey Partnership) until December 2003. He is a solicitor of theSupreme Court of England and Wales and a member of the Law Society of Englandand Wales. For further information: Fabian Romania Property Fund LimitedMark Holdsworth 020 7499 9988 Shore CapitalGraham Shore/Dru Danford 020 7408 4090 Deloitte Corporate FinanceJonathan Hinton/James Lewis 020 7936 3000 Pelham Public RelationsArchie Berens/Hugh Barker 020 7743 6670 Deloitte Corporate Finance is acting as Nominated Adviser and Co-promoter toFabian Romania Property Fund Limited and no one else in connection with thePlacing and Admission and will not regard any other person as its client or beresponsible to anyone other than Fabian Romania Property Fund Limited forproviding the protections afforded to clients of Deloitte Corporate Finance orfor providing advice in relation to the Placing and Admission or any matterreferred to herein. Deloitte Corporate Finance's responsibilities as the Fund'sNominated Adviser under the AIM Rules are owed solely to the London StockExchange plc and are not owed to the Fund or to any Director or to any otherperson in respect of their decision to acquire Shares in reliance on any part ofthis announcement. Deloitte Corporate Finance is a division of Deloitte & ToucheLLP, which is authorised and regulated by the Financial Services Authority inrespect of regulated activities. Shore Capital Stockbrokers Limited, which is a member of London Stock Exchangeplc and is regulated by the Financial Services Authority, has agreed to act asbroker to Fabian Romania Property Fund Limited. Persons receiving this documentshould note that Shore Capital Stockbrokers Limited is acting exclusively forFabian Romania Property Fund Limited and no one else in connection with thePlacing and Admission and will not regard any other person as its client or beresponsible to anyone other than Fabian Romania Property Fund Limited forproviding the protections afforded to clients of Shore Capital StockbrokersLimited or for providing advice in relation to the Placing and Admission or anymatter referred to herein. The directors of Fabian Romania Property Fund Limited collectively andindividually accept full responsibility for the information contained in thisannouncement. This announcement does not constitute an offer to buy or to subscribe for, orthe solicitation of an offer to buy or subscribe for, shares in Fabian RomaniaProperty Fund Limited. These shares have not been, and will not be, registeredunder the United States Securities Act of 1933 as amended (the "Securities Act"), or qualified for sale under the laws of any state of the United States orunder the applicable laws of any of Canada, Australia, the Republic of Irelandor Japan and may not be offered or sold to the United States or to, or for theaccount or benefit of, US persons (as such terms are defined in Regulation Sunder the Securities Act) or to any national, resident or citizen of Canada,Australia, the Republic of Ireland or Japan, or to any corporation, partnershipor other entity created or organised under the laws thereof, or in any othercountry outside the United Kingdom where such distribution may lead to a breachof any legal or regulatory requirement. The Fund's admission document will be available publicly, free of charge, for atleast one month from the date of Admission at the offices of Beachcroft LLP, 100Fetter Lane, London, EC4A 1BN and at the registered office of the Fund atElizabeth House, 9 Castle Street, St Helier, Jersey JE4 2QP, Channel Islands. The value of shares can go down as well as up. Past performance is not a guideto future performance. Persons needing advice should consult a professionaladviser. This information is provided by RNS The company news service from the London Stock Exchange