Last checked at 7 Sep 2007 13:46
FOR IMMEDIATE RELEASE
7 September 2007
LONDON & ASSOCIATED PROPERTIES PLC :
PROPOSED ACQUISITION OF OUTSTANDING 50% INTEREST IN ANALYTICAL PROPERTIES
HOLDINGS LIMITED, OWNER OF KING EDWARD COURT SHOPPING CENTRE, WINDSOR
* London & Associated Properties PLC ("LAP" or "the Company") to acquire 50%
interest in Analytical Property Holdings Ltd ("APHL") it does not already
own for approximately ‚£14.1 million in cash
* APHL holds one property - King Edward Court Shopping Centre, Windsor, of
which part is in the final stages of being redeveloped
* King Edward Court has market value of ‚£97.0 million and currently generates
annual net rents of approximately ‚£2.4 million. In addition, it has prelet
units in the redevelopment which will produce a further ‚£2.4 million of
rent on completion
* King Edward Court was originally acquired in joint venture with Bank of
Scotland for ‚£45 million in December 2002
* Proposed acquisition conditional on shareholder approval - irrevocable
undertakings obtained for approximately 57.21% of LAP's issued share
capital*
Contact:
London & Associated Properties Tel 020 7415 5000
John Heller, Chief Executive
Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
Oriel Securities Limited Tel: 020 7710 7600
Scott Richardson Brown
Gareth Price
* Excluding shares held in treasury by the Company
Details of the Proposed Acquisition
1. Introduction and summary of the Proposed Acquisition
The Company is pleased to announce that it has entered into a conditional sale and purchase agreement (the "Acquisition Agreement") with Uberior and Bank of Scotland to acquire the 50 per cent. interest in APHL that it does not already own (the "Proposed Acquisition"). The Company will make payments to complete the Proposed Acquisition of approximately ‚£14.1 million in aggregate.
Pursuant to the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire: (i) the 50 per cent. of the issued share capital of APHL that the Company does not already own from Uberior for approximately ‚£11.8 million; and (ii) ‚£1,829,000 of secured, subordinated "B" loan stock of APHL (the ""B" Loan Stock") from Bank of Scotland for ‚£1,829,000 plus an amount equal to the interest that has accrued on that "B" Loan Stock and continues to accrue up to completion of the Acquisition Agreement, which LAP estimates will be approximately ‚£454,000 if completion occurs on 25 September 2007.
Due to its size, the Proposed Acquisition is required under the Listing Rules to be conditional upon the approval of LAP's shareholders. A circular will be sent to shareholders in due course containing information relating to the Proposed Acquisition and a notice convening an Extraordinary General Meeting to consider and, if thought fit, approve the Proposed Acquisition.
The Company has obtained irrevocable undertakings from the Directors who are both the registered and beneficial owners of Ordinary Shares, certain members of the Heller family and related companies and trusts to vote in favour of the Resolution in respect of 43,608,004 Ordinary Shares, representing approximately 57.21 per cent. of the current issued share capital of the Company (excluding shares held in treasury by the Company), as at the latest practicable date prior to this announcement.
2. Background to and reasons for the Proposed Acquisition
APHL was established as a 50:50 joint venture company between the Bank of Scotland (through its wholly owned subsidiary Uberior) and LAP in 2002 to acquire shopping centres and retail properties. Since its establishment, APHL has proved to be a highly successful joint venture for its shareholders. APHL now holds one property, being King Edward Court in Windsor. LAP is proposing to buy Uberior out of the joint venture by purchasing the 50 per cent. of APHL that LAP does not already own.
Subject to shareholder approval, LAP will acquire control of King Edward Court upon completion of the Proposed Acquisition. King Edward Court is in the process of being redeveloped. This redevelopment comprises four new retail units, three of which have been pre-let to Zara, Hennes and New Look and one of which is under offer to a further national fashion retailer; a supermarket pre-let to Waitrose; a hotel pre-let to Travelodge; a kiosk under offer to a juice bar operator; and a vacant restaurant which is currently being marketed. Zara, Hennes, Waitrose, Travelodge and New Look have already taken possession of their units and are currently fitting them out. The remaining retail unit and the kiosk are expected to exchange in September 2007.
Following this redevelopment, the Company is confident of the future potential of the Property in continuing to deliver good returns to Shareholders.
LAP already manages King Edward Court and so the Board expects the integration of APHL as a wholly owned subsidiary of LAP to be straightforward.
3. Information on APHL
APHL is an unlisted property company focused on acquiring shopping centre developments and retail property investments with growth opportunities. APHL was set up in 2002 as a 50:50 joint venture between LAP and Bank of Scotland (through its wholly owned subsidiary Uberior).
The first investment by APHL and its subsidiary undertakings (the "APHL Group") was the ‚£45 million acquisition of King Edward Court in December 2002, followed by the ‚£50 million acquisition of Church Square, St Helens in July 2003. APHL Group subsequently disposed of St Helens in August of last year for approximately ‚£75 million, representing a realised net profit of over ‚£20 million.
APHL Group's sole remaining property is King Edward Court, Windsor.
For the twelve months ended 31 December 2006, APHL generated operating profits of ‚£14.2 million and profit before tax of ‚£8.0 million on net rental income of ‚£5.9 million. As at 31 December 2006 APHL had net assets of ‚£26.4 million and gross assets of ‚£130.0 million.
At present, LAP's 50 per cent. interest in APHL is equity accounted for with its share of net assets included in the Company and its subsidiary undertakings' (the "Group") balance sheet within "Investments in joint ventures" and included in the Group's income statement within "Share of profit of joint ventures after tax". Following the Proposed Acquisition, APHL will be accounted for as a fully consolidated subsidiary in the Group's financial information.
4. Financial Effects of the Proposed Acquisition
On completion of the Proposed Acquisition, Uberior and Bank of Scotland will receive approximately ‚£14.1 million in aggregate from LAP under the Acquisition Agreement.
LAP is able to meet the ‚£14.1 million required for the Proposed Acquisition from its existing cash resources and bank facilities.
At 31 December 2006, the Group held cash balances of ‚£14.56 million and had undrawn available facilities of ‚£12.74 million.
The directors of LAP believe that, taking into account the impact of the Proposed Acquisition, the Proposed Acquisition will be earnings enhancing to the Group.
5. Summary of Property Valuation Report
The Property has been externally valued by Allsop LLP at a market value of ‚£ 97.0 million. The net rent is approximately ‚£2.43 million per annum after a ground rent payable of ‚£1.5 million per annum. Three retail stores, the supermarket and the hotel have all been pre-let on leases of between 15 and 25 years at a total rental of ‚£2,412,811 per annum. One store, a unit and a kiosk are currently vacant.
6. Current trading and future prospects
On 4 May 2007, the Company issued its annual report for the year ended 31 December 2006, in which John Heller, the Chief Executive, states:
"Following the sale of Church Square, St Helens, the two properties in Notting Hill and The Mall, Dagenham we will have unencumbered cash on deposit of ‚£25 million. Although in the last 12 months we have been unable to identify any shopping centre investments that meet our strict acquisition criteria, we were able to acquire other types of retail property. We continue to look hard at every shopping centre that comes to market and believe that the slowdown in consumer spending being experienced and the lower rental growth that this causes may well lead to a softening of the shopping centre market in which we have traditionally specialised.
We are in a strong position due to our high cash reserves and undrawn facilities to take advantage of this and we can move quickly to acquire any suitable centres that come to the market.
The year to date is going well and I remain confident of a successful 2007."
The Company completed the sale of Saxon Square Shopping Centre, Christchurch, for ‚£20.5 million on 29 August 2007. This sale has further enhanced the Group's cash resources.
Since 31 December 2006, the end of the last financial year, LAP and APHL have continued to experience trading at satisfactory levels and the Board of LAP has confidence in the financial and trading prospects of the Company and the enlarged group (after completion of the Proposed Acquisition), for the current financial year.
7. Principal terms and conditions of the Proposed Acquisition
Pursuant to the terms of the Acquisition Agreement, LAP has conditionally agreed to acquire: (i) the 50 per cent. of the issued share capital of APHL that LAP does not already own in consideration of the payment by LAP to Uberior of approximately ‚£11.8 million in cash; and (ii) ‚£1,829,000 of "B" Loan Stock held by Bank of Scotland in consideration of the payment by LAP to Bank of Scotland of ‚£1,829,000 plus an amount equal to the interest that has accrued on that "B" Loan Stock and continues to accrue up to Completion, which LAP estimates will be approximately ‚£454,000 if completion occurs on 25 September 2007.
Completion of the Acquisition Agreement is conditional solely upon Shareholders approving the Proposed Acquisition at an Extraordinary General Meeting. If this condition has not been fulfilled on or before 5.30 p.m. on 31 October 2007, the Acquisition Agreement will terminate.
At completion of the Acquisition Agreement, the joint venture agreement between the Company, Uberior, the Bank of Scotland and APHL regarding the establishment and operation of APHL will be terminated.
Enquiries:
London and Associated Properties PLC Tel: 020 7415 5000
John Heller, Chief Executive
Robert Corry, Finance Director
Baron Phillips Associates Tel: 020 7920 3161
Baron Phillips
Oriel Securities Limited Tel: 020 7710 7600
Scott Richardson Brown
Gareth Price
The directors of LAP accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of LAP (who have taken all reasonable steps to ensure that such is the case) the information contained in this announcement for which they have accepted responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.
Oriel Securities Limited, which is regulated by the Financial Services Authority, is acting exclusively for LAP and no-one else in connection with the Proposed Acquisition and will not be responsible to anyone other than LAP for providing the protections afforded to its customers, nor for providing advice in relation to the Proposed Acquisition, the contents of this announcement or any other matters referred to herein.
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LONDON AND ASSOCIATED PROPERTIES PLC