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ECHO POLSKA PROPERTIES N.V. - Disposal of office portfolio

Release Date: 04/10/2017 08:05
Code(s): EPP     PDF:  
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Disposal of office portfolio

ECHO POLSKA PROPERTIES N.V.
(Incorporated in The Netherlands)
(Company number 64965945)
JSE share code: EPP
ISIN: NL0011983374
LEI Code: 7245003P7O9N5BN8C098
(“EPP or “the company”)


DISPOSAL OF OFFICE PORTFOLIO


1.     INTRODUCTION

       Shareholders are advised that EPP has reached an agreement for the disposal of a portfolio of office properties Tryton
       Business House in Gdansk, A4 Business Park in Katowice and West Gate in Wroclaw (the “Office Portfolio”). The
       agreed estimated transaction price for the shares in the companies controlling the Office Portfolio shall amount to
       EUR 160 million (the “Price”), (jointly the “Transaction”).

       The company intends utilising the sale proceeds from the disposal to finance further retail acquisitions.

       Further details of the Office Portfolio are set out in paragraph 4 below.

2.     RATIONALE

       Consecutive sale of the Office Portfolio forms significant part of the company’s strategy, as EPP is planning to
       become a purely retail investment platform over the period of next 3-4 years. The Office Portfolio subject to the
       Transaction consists of pre-selected assets, which represent high investment value. The Transaction generates profit
       on initial investment and proceeds can be used to fund further retail acquisitions limiting the necessity to raise capital
       from the market.

3.     TERMS OF THE TRANSACTION

       A preliminary agreement has been entered into on 3 October 2017 between EPP and Echo Polska Properties (Cyprus)
       PLC (EPP’s wholly owned subsidiary), as the sellers (the “Seller”) and Griffin Premium RE..N.V., as the purchaser,
       (the “Purchaser’) in terms of which, the Seller shall sell and the Purchaser shall buy the shares (the “Shares”) in the
       companies (being wholly-owned by the Seller)) which control the Office Portfolio.

       Subject to the satisfaction of certain conditions by 31 January 2018 (with a mechanism for prolonging the long stop
       date in case the condition listed under item 3 below is not satisfied on time), the Seller and the Purchaser shall be
       obliged to enter into a final share purchase agreement in respect of the Shares, and consequently the Purchaser shall
       pay the Price and the Seller shall transfer the Shares.

       The conditions include:

       1.   the acquisition of at least 50% plus one share in the share capital of the Purchaser by Globalworth Asset Managers
            SRL and/or Globalworth Real Estate Investments Limited (“GREIL”) in the tender offer announced by GREIL
            pursuant to an investment agreement relating to the shares in the Purchaser executed on or about the date of the
            agreement for the disposal of the Office Portfolio; and

       2.   the receipt by the Seller of the originals, and by the Purchaser of copies, from the relevant financing banks of a
            payoff letter(s) specifying the amount to be paid to the financing banks upon the completion of the Transaction
            to discharge the in-place financing;

       3.   the approval of the acquisition of Shares by the general meeting of shareholders of the Purchaser.

       On the completion of the Transaction the Seller shall execute the rental guarantee agreements (the “RGAs”) pursuant
       to which the Seller shall guarantee the rent for the vacancies in some of the buildings as well as certain parameters
       of the currently existing rental agreements. The term of the RGAs shall be from three to five years commencing on
       the day of the completion of the Transaction.

       The Seller has provided standard warranties and indemnities for a transaction of this nature. It envisaged that the
       business representations and warranties (i.e. other than the representations and warranties related to the title to the
       Shares and the real properties) will be insured.

4.     PROPERTY SPECIFIC INFORMATION

                                                                                                                       Value
                                                                                                               attributed to
                                                                                                 Weighted       the property
                                                                                           average office      as at 30 June
                              Property      Geographical                           GLA      rental per m2               2017
 Seller Subsidiary            name          location              Sector          (m2)            (EUR/m2)              (EUR)

 Ormonde spolka z
 organiczona
 odpowiedzialnoscia
 – Limited Partner
 Tryton
                              Tryton
                              Business      Gdansk, Poland        Office        23,997              12.62         50,200,000
 Emfold Investments           House                          
 spolka z
 organiczona
 odpowiedzialnoscia
 – General Partner
 Tryton

 Wetherall
 Investments spolka
 z organiczona
 odpowiedzialnoscia
 – Limited Partner            A4 Business
                              Park         Katowice, Poland      Office        30,556              13.17         65,200,000
                             
 Iris Capital spolka z
 organiczona
 odpowiedzialnoscia
 – General Partner

 Wagstaff                     West Gate     Wroclaw, Poland       Office        16,646              13.25         39,400,000
 Investments spolka
 z organiczona
 odpowiedzialnoscia

 Westgate spolka z
 organiczona
 odpowiedzialnoscia
                              Total                                             71,198              13.02        154,800,000

       The net operating income for the 12 months ended 30 June 2017 attributable to the Office Portfolio amounted to
       EUR 9,791,000. This historic information is not representative of the income generating capabilities of the assets due
       to some of them not being held for a full 12 month period. Annualized fully-let net operating income attributable to
       all assets from the Office Portfolio amounts to EUR 11,719,000.

       The values attributed to each of the properties comprising the Office Portfolio as of the date hereof is considered to
       be its fair market value, as determined by the directors of the company. The directors of the company are not
       independent and are not registered as professional valuers or as professional associate valuers in terms of the Property
       Valuers Act, No.47 of 2000.

5.     CATEGORISATION OF THE TRANSACTION

       In accordance with the JSE Listings Requirements, the Transaction is classified as a category 2 transaction and
       accordingly does not require approval by EPP’s shareholders.

6.     CAUTIONARY ANNOUNCEMENT

       Shareholders are referred to the cautionary announcement issued on 26 September 2017 (“cautionary
       announcement”), wherein shareholders were advised that EPP had entered into negotiations regarding certain
       potential acquisitions which, if successfully concluded, may have a material effect on the price of the company’s
       securities. The Transaction has no impact on the cautionary announcement and shareholders are accordingly advised
       to continue to exercise caution when dealing in the company’s securities until a further announcement is made.

4 October 2017


JSE Sponsor
Java Capital


LuxSE Listing Agent
M Partners


For more information:

Magda Cieliczko, Marketing Director Echo Polska Properties
Mobile: +48 603 203 619
magda.cieliczko@echo-pp.com

Java Capital, JSE Sponsor
Phone: +27 11 722 3050

M Partners, LuxSE Listing Agent
Phone: +352 263 868 602

Singular System IR
Michèle Mackey / Jacques de Bie
+27 (0)10 003 0700/+27 (0)82 497 9827
michele@singular.co.za; Jdebie@singular.co.za



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