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Terra Catalyst – Don’t expect distributions in the short to medium term

Terra Catalyst Fund has announced its interim results for the six months to 30 September 2015. Terra Catalyst’s sole remaining asset is Spazio Investments NV, an externally managed property fund that specialises in investment in Italian industrial real estate. Spazio owns a portfolio of 169 properties of predominantly industrial and logistics use, located throughout Italy. TCF indirectly holds a 26.7% interest in Spazio as at 31 March 2015. The investment manager, TCF and other funds under the management of Laxey Partners together control 72.4% of Spazio. The carrying value per share of Spazio in Terra Catalyst’s financial statements is €6.2695, being the audited Net Asset Value per share of Spazio as at 31st December 2014.

The company says that Spazio is focused improving the marketability of its portfolio through asset refurbishment and re-leasing. It concentrating on (i) increasing rental income and extending lease duration and (ii) selling vacant properties in order to release cash and improve its cash flow. Spazio is currently in negotiations, with its banks, with a view to refinancing of its outstanding loans (totalling €211.8m). The company says that the negotiations were triggered by the need to renegotiate the smaller loan (EGP for €32.8m) that expires in December 2015.

The company says that the first few months of the year saw improvements in property investments in Italy. They also say that the logistics sector also saw renewed interest by specialised operators. However, as previously communicated, due to the cash sweeps that are in place, there has not been any free cash available for distributions since October 2013, without substantial property sales. The company says that, whilst Spazio has managed to return €3.38 per share to shareholders to date, or 66% of the bid price, shareholders in TCF should not expect further substantial returns in the short to medium term.

Terra Catalyst – Don’t expect distributions in the short to medium term : TCF

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