Secure Property Development buying Romanian logistics portfolio – Secure Property Development and Investment has announced the proposed acquisition of up to a 50% interest in a portfolio of fully let logistics properties in Romania (the “Olympians Portfolio”), which currently generates a Net Operating Income of approximately €4.5m per annum.
The Olympians Portfolio: Fully let Grade A industrial properties generating ~€4.5m income p.a.
The Olympians Portfolio was co-developed and owned by GE Capital and is now owned by GE’s development partner Myrian Nes Ltd, a leading developer of Grade A logistics properties in Romania. It comprises warehouses strategically located close to national highways, thus facilitating the transportation of goods throughout the country and the wider region. The Olympians Portfolio is located across three key logistics areas in Romania, being the capital Bucharest, the industrial city and automotive centre of Timisoara on the Romania/Hungary border, and Brasov, a major city close to the capital. The existing portfolio of ~100k sq m of warehousing and office facilities is fully let to largely multinational tenants and generates a Net Operating Income of €4.5m.
SPDI’s existing logistics terminal in Bucharest (the Innovations Logistics Park) was also developed by Myrian Nes and it intends to develop additional warehouse space, which SPDI is expected to have first right of refusal to acquire.
The Proposed Acquisition complements SPDI’s existing logistics properties in Greece and Romania which, as announced on 28 September 2017, generated net operating income of ~€1.8m in H1 2017. Subject to acquiring the full 50% interest, the Olympians Portfolio would increase the total lettable area of logistics assets under management to 135,000 sq m.
Proposed Acquisition to be funded via debt and equity package
The Gross Asset Value of the Olympians Portfolio is approximately €50m, and there is a senior loan liability of approximately €30m secured against the portfolio.
The company intends to raise the majority of the consideration necessary to close the deal through the issue of a financial instrument with a value of between €3.5-4m, 35% of which consists of a convertible loan and 65% of which is made up of a warrant. The balance of the funding is expected to be provided in the form of external debt.
The convertible loan element of the Instrument bears a 6.5% coupon, has a 7 year term and is convertible into ordinary shares at the option of the holder at 25p starting from 1 January 2018. The warrant element of the Instrument provides subscribers with warrants over ordinary shares, which are exercisable at 10p until 31 December 2017.
SPDI CEO Lambros Anagnostopoulos commented, “The proposed acquisition of a fully let Grade A logistics portfolio underpins our strategy to increase SPDI’s income generating capacity in one of Europe’s fastest growing economies and in the strategically important South East corner of the EU. The commitments received to date from both existing and new investors for the Instrument represent an endorsement of our strategy and management’s ability to execute it. We continue to enjoy the support of investors who have backed us in the past to firstly generate above market returns on our investments; and secondly to build SPDI into a leading income producing property company in a region of the EU which has the highest growth potential.
The recent disposals at or above book value of Terminal Brovary and the pre-sale agreement regarding the Kiyanovski plot of land, both in Kiev, together with the plan to acquire the Olympians Portfolio demonstrate our ability to sell assets at prices that match the value indicated in the Company’s accounts and also to acquire quality income producing properties at attractive rates. This serves to highlight the anomaly that is the 50% plus discount at which our shares trade at compared to our Net Asset Value. Furthermore our NAV does not take into account the capital value appreciation we expect to see in the medium term as income yields in the region, which still hover at levels double those of western EU countries, converge to those in the rest of the EU as the underlying economies, including Romania, continue their fast pace of growth.”
SPDI : Secure Property Development buying Romanian logistics portfolio