Sdic Power. Regulatory News (SDIC)

1 Apr 2008 07:00

Speymill Deutsche Immobilien Co PLC01 April 2008 1 April 2008 Speymill Deutsche Immobilien Company plc ("SDIC" or "the Company") C Share Portfolio Investment Update Speymill Deutsche Immobilien Company plc (AIM: SDIC; SDCC), the pan-Germanresidential property investment company listed on AIM, announces furtherinvestments for the second tranche of funds raised ("the C Share Portfolio"). Main highlights as at 31 March 2008 are: - Residential properties in and around various German cities and towns have beeneither notarised (i.e. committed to be purchased) or internally allocated (*seenote below) for a cumulative cash consideration of approximately EUR589.6million. In addition, refurbishment related costs of over EUR24.1 million are tobe borne by the fund entities. - Initial net rental income as at notarisation is expected to be approximatelyEUR.40.8 million per annum. This amount will be temporarily augmented by initialrental guarantees for vacancies while certain refurbishments are being carriedout. - Blended net initial property yield as at notarisation, based on purchase priceand excluding rental guarantees but including refurbishment costs, is expectedto be 6.65%. This yield is anticipated to rise to 6.9% at the end of the periodcommencing 12 months after completion of all acquisitions, full takeover ofproperty management and completion of refurbishments ("stabilised yield"). In addition, refurbishment costs of approximately EUR18.0 million relating toapproximately EUR142.4 million of the current notarised properties are to beborne by the sellers. Rental guarantees are in place for one year following thecompletion of those refurbishments. Taking these rental guarantees into account,the adjusted initial net rental income as at notarisation is approximatelyEUR42.5 million per annum. The Company has in aggregate notarised or internally allocated* 10,686 apartmentblock units at an overall average price of EUR842 per square metre. There were approximately 995 vacant units at notarisation (approximately 9.3%total vacancy). These include units in buildings covered by the rentalguarantees refered to above. The economic vacancy rate, adjusted for rentalguarantees, is approximately 4.6%, although this may rise temporarily followingnotarisation and during the refurbishment period as detailed below. After contract completion and when the properties have been taken over,refurbished and are fully under management for a suitable period, the Companywill target a 95% overall occupancy rate (allowing for some natural vacancy andtenant fluctuation). It is envisaged that this target will be reached in thesecond year after takeover. Summary C Share Portfolio Information Total Number of Units 10,686Total Purchase Price EUR 589.6 millionAverage Price per m2 EUR 842Net Rental Income (excluding rental guarantees) EUR 40.8 millionNet Initial Yield (excluding rental guarantees) 6.65%Stabilised Yield 6.9% Note: The stabilised (normalised) rent represents a target income level based on a 95%occupancy. If not already achieved, it is envisaged that this will be reached inthe second year after takeover. In the few months to one year after assuming full ownership and management, therental income level may temporarily fall from the level at notarisation for thefollowing reasons: - the buildings may be subject to some refurbishment which can lead toincreased tenant turnover;- during the handover period between notarisation and completion, the incumbentowner may be less active in managing the property and, consequently, there maybe additional vacancies that will need to be replaced through letting activityfollowing completion; or- the building's operating/service charge costs may have to be subsidised out ofrental income before a reconciliation with tenants occurs (this typically occursin the year following takeover). *Berlin assets which were originally purchased with funds from the OrdinaryShare Portfolio have been internally reallocated to the C Share Portfolio in anaccounting exercise for a consideration of EUR18.29 million plus EUR63.10million debt. This follows the production of a valuation report by DTZ whichvalued the assets at EUR81.39 million. The net amount payable will be internallytransferred to the Ordinary Share bank account and the recognised uplift for theOrdinary Share Portfolio is EUR10.25 million. The annual net rental incomecurrently earned by these properties is approximately EUR4.8 million and, takinginto account initial rental guarantee adjustments, the adjusted overall netinitial rental yield for the C Share Portfolio is approximately 7%.Transactional costs, estimated to be in the region of EUR8.7 million, will besaved by the C Share Portfolio. The consideration will be paid using existingcash resources of the C Share Portfolio and will improve the liquidity of theOrdinary Share Portfolio. The net cash effect on the Company overall is nil. For more information, please visit www.sdic.co.im or contact: Speymill Property Group (Manager) Floris van Dijkum, Global Chief Investment Officer +44 20 7659 0763Paul Smith, CFO Funds +44 1624 640864 Smith & Williamson Corporate Finance Limited (Nomad) +44 20 7131 4000Azhic BasirovJoanne du Plessis Fairfax I.S. PLC (Brokers) +44 20 7598 5368James King Tavistock Communications +44 20 7920 3150Jeremy CareySimon HudsonGemma Bradley Notes to editors: Speymill Deutsche Immobilien Company plc is a pan-German residential propertyinvestment company, which listed on the AIM market of the London Stock Exchangein March 2006, raising £170 million (EPIC: SDIC.L). In May 2007, SDIC raised afurther €250 million through a C share placing (EPIC: SDCC.L). The Eurodenominated fund aims to provide investors with an attractive level of incometogether with the prospect for long-term capital growth. The German residential market is viewed as increasingly attractive to investorsdue to a number of factors including rising German economic activity andproductivity, and the availability of assets at below replacement cost. Acquiredproperties should, through active management, also have the potential forincreased rental rates and accordingly improved capital values and increasedyield. Speymill Property Group Limited is the appointed Manager to SDIC and, inconjunction with the Investment Advisor, Goal Service GmbH, it identifiesacquisition opportunities for the Company, which fit within its investmentcriteria. This information is provided by RNS The company news service from the London Stock Exchange