Trinity Capital Regulatory News (TRC)

10 Apr 2008 07:00

Trikona Trinity Capital PLC10 April 2008 Trikona Trinity Capital PLC ("Trikona TC" or "the Company") Pre-Close Update Trading Statement Trikona Trinity Capital PLC (AIM: TRC), a fund created for investing in Indianreal estate and infrastructure, and managed by Trikona Capital, announces atrading statement ahead of its preliminary results for the period ended 31 March2008. Since listing, Trikona TC has successfully invested more than £196 million in 12high-profile projects, demonstrating an uplift in Net Asset Value ("NAV") of 82%on invested capital as at its interims results stated 30 September 2007. Key Developments since 30 September 2007: November 2007, Blackstone invested in Pipavav Shipyard Limited ("PSL"),development project 8, at a valuation of INR 80 per share against the Company'sinvestment at INR 25 per share in January 2007. December 2007, Trikona TC closed the sale of a select portion of Trikona TC's investment portfolio to SachsenFonds for £32.11 million representing a gain of 108% over a holding period ranging from 9 to 14 months. January 2008, the Company's Uppal IT Park "Tech Oasis" (Development Project 1) received Special Economic Zone ("SEZ") status, providing an estimated cost saving of over £70 million in income tax and a further £15 million in construction costs over the next ten years. April 2008, SachsenFonds extended its strategic partnership with Trikona TC and signed a Memorandum of Understanding ("MoU") with a transaction value worth approximately £80 million to acquire certain assets and co-invest in new projects. Market Overview: The two-year run of developer-centric pricing for residential projects has cometo an end with the recent price easing favouring the consumer. This priceadjustment will actually help attract a large number of middle income homebuyers who have been shying away from high-priced development and further reducespeculative purchases. We believe this will enable supply and demand insuper-metros like Mumbai to remain fairly balanced. Areas of caution include the IT/ITES asset class in the National Capital Region(NCR) where there are signs of softening demand. We expect some of this slack todisappear as SEZs begin to attract companies seeking tax protection, as the taxholidays begin to wind down by March of 2009. However, the Indian government estimates public and private organizations willspend between US$330 billion to US$500 billion over the next five yearsdeveloping infrastructure and financing infrastructure-related real estateprojects. This Marshall-Plan sized program will produce the most significantinvestment opportunities to organizations with the depth and expertise toidentify, source and execute key projects. As a whole, therefore we believe developers will need to reposition products tostimulate demand and investors will need to look at sectors like infrastructurerelated real estate to continue to achieve the types of returns they haveenjoyed over the past two years. Project Highlights: Development Project 1: Uppal IT Park - "Tech Oasis" •In January 2008, the Board of Approvals in India gave Uppal IT Special Economic Zone ("SEZ") status for the project. Full approval is expected to be gained in June 2008. •In November 2007, SachsenFonds Holdings GmbH ("SF"), a leading German fund manager acquired an 8% minority interest in project. Development Project 2: Rustomjee's Township •Site development for Phase I is complete. •Pre-sales were launched in October 2006 at the base rate of INR 2,925/USD 87.25 per sq. ft. The apartments are currently being sold at the base rate of INR 4,500/USD 105 per sq. ft. This represents an appreciation of 54% from the launch date. €51% of the phase-one area (279,468 sq. ft./311 apartments) has already been pre-sold. Sales in February 2008 sales were lower at 7 apartments due to no inventory. •Average sales realisation for the total pre-sold area is over INR 4,000/ USD 100 per sq. ft. which is 20% higher than assumed in business plan. Development Project 3: MK Malls •As against the rentals assumed in the original business plan at INR 205 per sq. ft. the current rentals in the vicinity are in the range of INR 400 - 440 per sq. ft. per month. •In November 2007, SF acquired a 40% minority interest in the project. Development Project 4: Lady Ratan Seasons •Approximately 70% of structural work has been completed for the first two rehabilitation buildings comprising about 90,000 sq. ft. •The only Four Seasons hotel in India opened for business in March 2008, located within the neighbourhood of the development. •In November 2007, SF acquired a minority interest of 41% in the development. Development Project 5: Manjeera Retail Holdings ("Manjeera") •The excavation of an S2 site started in August 2007 and is likely to be completed by May 2008 instead of January 2008. The delay is due to project 5 being awarded an additional 10% of FSI. •The marketing tie-up for the retail space has been firmed up with Jones Lang LaSalle Meghraj (JLLM). The marketing and sale of residential and office space will be handled by the developer himself. •The widening works of approach road from JNTU to HITEC city are in progress which will improve the traffic flow and marketability of the project. •The promoters have invested INR 150 mm / USD 3.75 mm in October 2007, as a final instalment of their equity contribution. •The bank guarantee has been executed in favour of APHB (Andhra Pradesh Housing Board) on December 27, 2007 as per the terms of the development agreement executed with APHB. •In November 2007, SF acquired a 41% minority interest in the development. Development Project 6: Neelkamal Marine Drive (DB Hospitality) •Occupancy levels at the operating hotel in Mumbai (Le Meridien) are 94% which is higher than budgeted occupancy of 92%. Due to higher average room rent at INR 11,632 / USD 291, gross revenue for the month of February 2008 was 9% higher than budgeted. Equity Development Holding 7: Fortis Healthcare Limited •The majority of Fortis hospitals would qualify for the recent Union Budget proposal to provide a five year tax holiday in respect of profits derived from business of operating and managing hospitals located in non-metro cities, which start functioning between 1 April 2008 and 31 March 2013 subject to conditions. Equity Development 8: Pipavav Shipyard Limited ("PSL") •The order booking has commenced and PSL has already booked orders worth US$1.05 billion. •Along with Trikona TC, other private equity funds including New York Life, Standard Chartered, Deutsche Bank, Citadel and Merrill Lynch have made significant investments in the company. •Since the interim results statement in November 2007, Blackstone invested in PSL at a valuation of INR 80 per share against the Company's investment at INR 25 per share in January 2007. •In January 2008, PSL filed its Draft Red Herring Prospectus with SEBI for an Initial Public Offering on the Bombay Stock Exchange for 86.8 mm equity shares. Pricing is yet to be finalised. Development Project 10: Luxor Cyber City - "SEZ" IT/ITES Development •The Uppal Group is developing a five star hotel adjoining the project which is expected to enhance the marketability of the project. •As per the Cushman and Wakefield report of September 2007, the rentals for Gurgaon prime commercial space is currently quoted at INR 113 per sq. ft. and the capital value is being quoted as INR 14.282 per sq ft. The appreciation in rentals and capital value of 3-5% is being witnessed over the previous quarter. •Additionally, the prime residential value is being quoted at INR 6,250 per sq. ft. Michael Cassidy CBE, Chairman of Trikona Trinity Capital PLC, said: "We continueto operate ahead of the plan stated in our admission document. We havedemonstrated the ability to source lucrative investments opportunities,institutionalize assets and companies, and crystallize the value added bybeginning to realise high cash returns. We expect the key developments duringthe second half of the financial year to have driven further progression in theNAV of the Company. The Board remains confident that the Company is wellpositioned for continued strong performance into the next financial year andlooks towards the real estate based infrastructure market for that growth." - ENDS - Enquiries: Trikona Trinity Capital PLC managed by Trikona Capital Limited +44 207 871 0099 Aashish Kalra, Managing DirectorAshesh C. Shah, Global Head of Corporate Development Bell Pottinger Corporate & Financial +44 207 861 3232 Nick LambertAmy Rajendran Gutenberg Communications Michael Sherrill (New York) +1 2122398741Pranav Kumar (New Delhi) +91 98100 77898 Numis Securities +44 207 260 1000 Jag Mundi, Head of Corporate FinanceJames Keane, Corporate Broking Fairfax I.S. PLC +44 207 598 5368 Paul Richards, Head of Corporate Finance Notes to Editors About Trikona Trinity Capital PLC: Trikona Trinity Capital PLC (AIM: TRC) was listed on the London Stock Exchangeas Trinity Capital in 2006, raising £250m of equity. The fund invests in realestate and infrastructure related entities across India, with a target size ofbetween £5m and £30m per transaction. Becoming fully invested six months aheadof schedule, its investment strategy is unique - selecting developers with aproven track record in the development type or in the local market. The Companyalso adopts a socially aware attitude to development, investing in projectswhich will actively improve India's underdeveloped social and physicalinfrastructure. In November 2007 Trikona TC became the first London listed fund of its kind torealise significant returns on its investments, with the divestment of part ofits share holdings creating a gain of 108% over the holding period. It ismanaged by Trikona Capital, the leading real estate fund management firm inIndia. www.trikonatrinitycapitalplc.com This information is provided by RNS The company news service from the London Stock Exchange