Last checked at 9 Jun 2016 07:00
Secure Property Development & Invest PLC/ Index: AIM / Epic: SPDI / Sector: Real Estate
9 June 2016
Secure Property Development & Investment PLC ('SPDI' or 'the Company')
Sale of Ukrainian Warehouse
Secure Property Development and Investment PLC (AIM: SPDI), the South Eastern European focused property and investment company, is pleased to announce that it has signed heads of terms with Temania Enterprises Ltd for the sale of its Kiev based warehouse, Terminal Brovary, at a Gross Asset Value exceeding US$16 million (before deducting the outstanding EBRD attached loan). As completion of the disposal is subject to a number of conditions being met, the Company has also signed a fixed four-year lease agreement with a subsidiary of the buyer raising the warehouse occupancy rate to 100%, thus generating ~US$150,000 of Net Operating Income ('NOI') per month until the sale is concluded. The rent attributed to the buyer received prior to the disposal will be deducted from the purchase price, if such disposal is concluded by the end of October 2016. Once the sale is concluded, the Directors believe it will be one of the largest property asset transactions in Ukraine in the logistics and industrial sector since 2013.
The sale of Terminal Brovary, which the Company developed in 2010 on the north side of Kiev, the capital city of Ukraine, close to its international airport, is subject to a number of conditions, including reaching agreement on terms with the lending bank (EBRD) with regards to the related debt attached to Terminal Brovary, which may take some time to be effected. The Board is pleased that is has agreed terms for both the rental as well as the sale, especially taking into consideration the recent economic situation in the country.
SPDI has a portfolio of properties with blue chip tenants in high-yielding South Eastern European countries, which have favourable supply and dynamics for modern commercial properties. Its strategy is to deliver value to shareholders by acquiring and managing properties that match its investment criteria: generate annual cash-flows from solid covenants in assets in good locations as well as having scope for capital appreciation as yields converge towards the Central Eastern European and eventually the Western European levels. The Company's portfolio now includes logistics terminals in Athens, Bucharest and Kiev, offices in Sofia and Bucharest, as well as a big box retail in Craiova, Romania.
SPDI CEO Lambros Anagnostopoulos commented, "This transaction is in line with our strategy to optimise the value of our prime real estate properties across South Eastern Europe, either through the timely commercialization (including potential disposal) of assets, when opportunities to generate value for our shareholders are presented to us, or through maximising the cash generation through active rent roll management. Our aim is not only to expose our shareholders to the European yield compression play and the significant capital appreciation on offer, but also to generate substantial cash from managing our portfolio of income producing assets. On completion of the sale we expect to receive a material cash injection into the Company, which will assist us in this growth plan.
"We are focused on positioning ourselves as the go to investment vehicle for investors looking to gain exposure to the region's highly attractive commercial property markets. At the same time, we aim to close the disconnect that has opened up between the net asset value of our Company and our share price."
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