RNS Number:7227V
North Real Estate Opportunities Fd
30 April 2007
PRESS RELEASE FOR IMMEDIATE RELEASE
30 April 2007
NORTH REAL ESTATE OPPORTUNITIES FUND LIMITED
Unaudited Interim Accounts as of 31 January 2007
North Real Estate Opportunities Fund ("NRE" or the "Company") is pleased to
announce to shareholders its unaudited Interim Accounts as of 31 January 2007.
Highlights
* Investment of Euro80 million of Euro100m raised at Company's launch in August
2006
* Commitment of substantially all of Euro100m raised to projects either
completed or under negotiation
* 10% increase above August 2006 NAV per share before one-off Company launch
costs
* Unaudited NAV per share as of 31 January 2007 before one-off Company
launch costs of 110 cents
* Unaudited NAV per share as of 31 January 2007 after one-off Company launch
costs of 106 cents
* Current asset management initiatives at the European Retail Park Sibiu
anticipated to increase net rental income and yield on cost to approximately
8.5%
* Construction of Suceava Shopping City progressing on schedule with opening
planned for April 2008
Robert Provine and Magnus Lofgren, Fund Managers of NRE commented:
"The first six months since listing have been both a successful and productive
period for NRE. We have committed the majority of our funds to projects and are
ahead of schedule in executing our business plan of creating a dominant
portfolio of destination retail parks and shopping centres across the region. We
are also pleased to have identified a further portfolio of transactions in
Romania and Ukraine, in conjunction with our leading anchor tenants
relationships, which we believe will be strongly accretive to shareholder
returns."
-Ends-
North Real Estate Opportunities Fund Ltd
+44 207 590 7600
Robert Provine
Merlin
+44 207 653 6620
Angus Urquhart, mobile +44 7787 504 447
Bridget Fury, mobile +44 7941 085 506
Notes to Editors
North Real Estate Opportunities Fund Ltd is a Guernsey based closed-ended
investment company. The company is listed on the London Stock Exchange's AIM
market and is managed by North Asset Management, with offices in London and
Bucharest.
www.nreof.com
CHAIRMAN'S STATEMENT
New issue and AIM listing
North Real Estate Opportunities Fund Limited (the "Company") was launched on 16
August 2006. The Shares of the Company have been admitted to trading on the AIM
market of the London Stock Exchange ("AIM"). AIM is a market designed primarily
for emerging or smaller companies to which a higher investment risk tends to be
attached than to larger or more established companies. AIM securities are not
admitted to the Official List of the UK Listing Authority (the "Official List").
The Company is a closed-ended investment company registered and incorporated on
14 July 2006 in Guernsey. The Company has a planned life initially to 31 July
2013, subject to extension by resolution at a general meeting of Shareholders.
Objective
The Company has been formed for the purpose of investing primarily in the
commercial property markets of central and Eastern Europe. These target
countries include Poland, the Czech Republic, Slovakia, Hungary, Romania and
Bulgaria. Its investment objective is to provide investors with a high level of
risk adjusted total returns derived principally from rental income and capital
appreciation from the acquisition, development and active asset management of
its property investments.
Financial performance
North Real Estate Opportunities Fund ("NRE" or the "Company") is pleased to
announce to shareholders an increase in its unaudited Net Asset Value ("NAV")as
of the 31 January 2007 along with an update on the Company's positive trading
progress.
Highlights
* Unaudited NAV per share as of 31 January 2007 before one-off Company
launch costs of 110 cents.
* Unaudited NAV per share as of 31 January 2007 after one-off Company launch
costs of 106 cents.
* 10% increase above the August 2006 NAV per share before one-off Company
launch costs.
* NAV figures are based on third party independent Property Valuation
Reports as of the 31 January 2007 executed by Jones Lang LaSalle.
* Since the Company's launch in August 2006, it has invested some Euro80
million of its Euro96 million in initial equity proceeds.
* A number of asset management initiatives are underway at the European
Retail Park Sibiu which are anticipated to increase the net rental income of
the project and the yield on cost to about 8.5%.
* Construction of the Suceava Shopping City is progressing according to
schedule with opening planned for April 2008.
* The Company is confident that by the summer it will have committed 100% of
available equity to investment and development projects currently under due
diligence, well ahead of expectations.
CHAIRMAN'S STATEMENT (continued)
Further details of the NAV
The unaudited NAV covers the five and a half month period following the
Company's launch on the London Stock Exchange's Alternative Investment Market
("AIM") to 31 January 2007.
Jones Lang LaSalle's valuation of NRE's first completed operational asset, the
European Retail Park Sibiu (100% owned by the Company), showed an increase in
market value from the purchase price of Euro82.7 million, before purchase costs, to
a current market value of Euro95.8 million, also before purchase costs. The up-lift
in valuation derives from a combination of on-going asset management initiatives
being implemented by NRE's Manager, North Asset Management, as well as a modest
improvement in market investment yields.
The Company's real estate assets and cash were valued at Euro106.1 million compared
to Euro96 million as at 16 August 2006. Accordingly, NRE's unaudited NAV as at 31
January 2007 (calculated to IFRS standards by adding the cash balance and any
other assets less all remaining liabilities) totalled Euro110.1 million before
one-off Company launch costs and Euro106.1 million after one-off Company launch
costs.
The unaudited NAV per Common Share as at 31 January 2007 was calculated after
dividing the above mentioned NAV's by 100 million of common shares on issue as
of 31 January 2007 which resulted in a NAV per share of Euro1.101 before one-off
Company launch costs and Euro1.061 after one-off Company launch costs.
Accounting practices
The Company has adopted the IFRS reporting standards and has prepared unaudited
consolidated financial statements for this first period of operations. The
accounts have been prepared by the Company's Guernsey based Administrators,
Mourant Guernsey Limited. The Company's reporting currency is in Euros.
Dividend
The Board has declared that the Company will not pay an interim dividend in its
first period of operations, reflecting a period of set up costs and initial
investments.
Prospects
As mentioned in NRE's Trading Update on 7 February 2007 the Company's Manager,
following the interest of several of the Company's key anchor tenants, has
identified a further pipeline for the development of a diversified network of
institutional quality retail shopping centres anchored by leading international
large-format retailers in NRE's target markets.
John Edward Southgate-Sayers
Chairman
Date: 30th April 2007
MANAGER'S REPORT
Led by fund managers Magnus Lofgren and Robert Provine and supported by an
Advisory Board of distinguished and influential European business leaders, NRE
implements a focused strategy of creating institutional quality retail property
assets in leading primary and secondary cities in Central and Eastern Europe
with a particular focus on Romania, Bulgaria, Moldova and the Ukraine. The
Company's ticker is NRE.
Since its launch in August 2006, NRE has committed substantially all of its
original Euro100m in equity capital to projects, either completed or under
negotiation, and has invested approximately Euro80m of those proceeds. With an
initial raising of Euro100 million, NRE has the ability to acquire or develop
assets up to Euro400 million in value through the use of leverage.
European Retail Park Sibiu, Sibiu, Romania
NRE acquired the European Retail Park Sibiu in November of 2006 for Euro83m. The
Real Hypermarket (Metro Group) anchored retail park includes several large
international and regional retailers including Baumax, Media Galaxy, Mobilia.
The 47,000 sqm scheme is the city's only Class-A shopping mall.
Since acquiring the property, NRE has launched several asset management
initiatives including the development of a 6,000 sqm extension to accommodate
four further highly-regarded western European retailers. NRE has also initiated
plans for a 5,000 sqm leisure area including a multiplex cinema and multi-lane
bowling alley following strong interest from a successful regional leisure
operator / tenant. The property is currently managed by Cushman Wakefield and
has approximately 96% occupancy with all vacancy covered by a rental guarantee
from the vendor.
Suceava Shopping City, Suceava, Romania
NRE commenced works on Suceava Shopping City in November of 2006, a 50,000 sqm
retail park anchored by a Carrefour Hypermarket. The park will include several
other prominent "big-box" retailers including Baumax, Media Galaxy and Mobexpert
as well as a 10,000 sqm shopping mall. The development is scheduled for
completion in Spring 2008 and will entail a Euro66m total investment including an
equity commitment of approximately Euro15m by NRE.
Moldova Retail and Mixed Use Development Sites, Chisinau, Republic of Moldova
In February this year, NRE announced, in conjunction with a local partner, the
acquisition of a retail and mixed use development site in the historic city
centre of Chisinau, the Republic of Moldova's capital. NRE is also currently
assembling two further potential retail park sites on prominent motorway
locations on the periphery of the Chisinau. These are planned to accommodate
retail park projects similar to those currently being undertaken by the Company
in Romania. The Company's total equity commitment to its Moldovan projects is
approximately Euro12m.
Further developments and acquisitions in Romania and Ukraine
North has identified a further pipeline of compelling and internal rate of
return accretive retail development projects and investment acquisitions in line
with NRE's investment objectives including three retail park projects secured in
Romania with an investment value in excess of Euro250m and a portfolio of retail
development sites identified in Ukraine and Romania totalling just over Euro100m.
The full programme will utilise the remaining equity capital in the Company and
proceeds from the refinancing of existing assets. In addition, the Company is
considering other capital raising options to fund this and other fully specified
further pipeline which it will be discussing directly with shareholders over the
coming months.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)
As at 31 January 2007
ASSETS Euro
Non-current assets
Investment properties 95,800,000
Other assets 22,493
--------------------------------------------------------------------------------
Total non current assets 95,822,493
--------------------------------------------------------------------------------
CURRENT ASSETS
Trade and other receivables 19,389,303
Other accrued income and prepaid expenses 15,899
Cash and cash equivalents 36,811,097
--------------------------------------------------------------------------------
Total current assets 56,216,299
--------------------------------------------------------------------------------
Total assets 152,038,792
--------------------------------------------------------------------------------
EQUITY
Capital and reserves attributable to equity holders of
the company
Share capital 1,000,000
Capital reserves - distributable 95,000,000
Capital reserves - non-distributable 13,133,333
Retained earnings (2,994,973)
Total equity 106,138,360
--------------------------------------------------------------------------------
LIABILITIES
Current liabilities
Bank loan 35,878,897
Trade and other payables 9,192,953
Provisions for other charges and liabilities 828,582
Total liabilities 45,900,432
--------------------------------------------------------------------------------
Total equity and liabilities 152,038,792
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT (UNAUDITED)
For the period from 14 July 2006 (date of incorporation) to 31 January 2007
--------------------------------------------------------------------------------
Euro
INCOME
Gross rental income 1,150,097
Other income 430,948
Property operating expenses (938,472)
Net rental and related income 642,573
--------------------------------------------------------------------------------
Changes in fair value of investment property 13,133,333
--------------------------------------------------------------------------------
EXPENSES
Investment advisor's fees (918,478)
Legal and professional fees (2,897,771)
Other administration fees and expenses (315,803)
Operating profit 9,643,854
--------------------------------------------------------------------------------
NET FINANCING INCOME
Finance income 973,441
Finance costs (352,030)
Net foreign exchange gain 287,942
909,353
--------------------------------------------------------------------------------
PROFIT BEFORE TAXATION 10,553,207
Taxation (414,847)
PROFIT FOR THE PERIOD 10,138,360
--------------------------------------------------------------------------------
Basic and diluted earnings per ordinary share 0.10
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED)
For the period from 14 July 2006 (date of incorporation) to 31 January 2007
Euro
OPERATING ACTIVITIES
--------------------------------------------------------------------------------
Net operating profit for the period before finance costs 9,643,854
Adjustment for:-
Change in fair value of investment property (13,133,333)
(Increase) in operating trade and other receivables (19,405,202)
Increase in operating trade and payables 10,021,535
Interest received 973,441
Interest paid (352,030)
Foreign exchange gains 287,942
Taxation (414,847)
--------------------------------------------------------------------------------
Net cash outflow from operating activities (12,378,640)
--------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of investment property (58,769,915)
Purchase of property, plant and equipment (22,493)
--------------------------------------------------------------------------------
Net cash outflow from investing activities (58,792,408)
--------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from the issue of shares 100,000,000
Issue costs (4,000,000)
Net drawdown of bank loan 11,982,145
--------------------------------------------------------------------------------
Net cash inflow from financing activities 107,982,145
--------------------------------------------------------------------------------
Increase in cash and cash equivalents 36,811,097
Cash and cash equivalents at start of period -
--------------------------------------------------------------------------------
Cash and cash equivalents at 31 January 2007 36,811,097
--------------------------------------------------------------------------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
For the period from 14 July 2006 (date of incorporation) to 31 January 2007
Share Share Distrib Non-distrib- Revenue Total
-utable utable
capital premium reserve reserve reserve
Euro Euro Euro Euro Euro Euro
Share capital 1,000,000 - - - - 1,000,000
Share premium
on issue - 99,000,000 - - - 99,000,000
Cancellation
of share
premium - (95,000,000) 95,000,000 - - -
Placing fees
and formation
costs - (4,000,000) - - - (4,000,000)
Unrealised
gain on
revaluation
of
investment - - - 13,133,333 - 13,133,333
properties
Net loss for
the period - - - - (2,994,973) (2,994,973)
--------------------------------------------------------------------------------
Balance at 31
January 2007 1,000,000 - 95,000,000 13,133,333 (2,994,973) 106,138,360
--------------------------------------------------------------------------------
SELECTED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION
1. GENERAL INFORMATION
The Company is a limited liability, closed-ended investment company incorporated
in Guernsey.
The Company invests in commercial property in Central and Eastern Europe which
is held through its subsidiary companies. The consolidated financial statements
of the Company for the period ended 31 January 2007 comprise the financial
statements of the Company and its subsidiaries (together referred to as the
"Group").
2. PRINCIPAL ACCOUNTING POLICIES
a. Basis of preparation
The condensed interim financial information for the period ended 31 January 2007
has been prepared on an ongoing concern basis, on the basis of International
Financial Reporting Standards (IFRS), and with the legal and regulatory
requirements of Guernsey law. It has been presented in accordance with IAS34,
'Interim financial reporting' and the accounting policies set out below.
As this is the first period of operation there are no comparative figures. The
same accounting policies and methods of computation are followed as are expected
to be applied in the annual financial statements.
b. Foreign currency translation
The financial statements are presented in Euro as this is the currency in which
the funds were raised and in which investors are seeking a return. The
functional currency of the Group once the equity is fully invested will also be
Euros as most economic transactions will be made in that currency.
Transactions in foreign currencies are translated at an average rate for the
month in which the transaction takes place. Monetary assets and liabilities
denominated in foreign currencies are translated into Euros at the rate ruling
at the balance sheet date. Foreign exchange differences arising on translation
are recognised in the consolidated income statement.
c. Basis of consolidation
Subsidiaries are those entities, including special purpose entities, controlled
by the Company. Control exists where the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. All inter-company loan balances, interest
charges and cross investments are eliminated on consolidation.
d. Income
Interest receivable is included in the financial statements on an accruals
basis. Rental income from investment property leased out under operating leases
is recognised in the consolidated income statement on a straight-line basis over
the term of the lease.
SELECTED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
e. Expenses
Expenses are accounted for on an accruals basis and include those of the
Administrators, the Manager and the Directors. The costs associated with
acquiring investment properties are included with the cost of that investment.
f. Formation and initial expenses
Formation and initial expenses include the costs arising from the incorporation
of the Company and the placing.
g. Taxation
The Company has obtained exempt company status in Guernsey under the terms of
the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly is
subject to an annual fee of #600. The Directors intend to conduct the Group's
affairs such that it continues to remain eligible for exemption. Local taxation
payable in the jurisdictions in which the Group operates are charged to the
income statement as they arise. There is no deferred tax at the balance sheet
date.
h. Dividends
Interim dividends are recognised as a liability in the period in which they are
paid. Final dividends are recognised once they are approved by shareholders.
i. Investment properties
Investment properties are those which are held to earn rental income and capital
appreciation. They are initially recognised at cost including the transaction
costs associated with the property and will be re-valued at least annually,
calculated in accordance with IAS40 and the practice statements of the RICS
Appraisal and Valuation Manual, adapted as necessary to reflect individual
market considerations and practices. The investment properties figure shown in
the accounts represents the fair value of the properties held at the balance
sheet date.
j. Financial instruments
Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes party to the contractual provisions of the
instrument. The Group shall offset financial assets and financial liabilities if
the Group has a legally enforceable right to set off the recognised amounts and
interests and intends to settle on a net basis.
k. Other receivables
Other receivables do not carry any interest and are short-term in nature and are
accordingly stated at their nominal value as reduced by appropriate allowances
for estimated irrecoverable amounts.
l. Other payables
Other payables are not interest-bearing and are stated at their nominal value.
SELECTED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
m. Share capital
Ordinary shares are classed as equity. External costs directly attributable to
the issue of the shares are shown in equity as a deduction from the proceeds.
3. BASIC AND DILUTED EARNINGS PER SHARE
The basic and diluted earnings per Ordinary Share are based on the net profit
for the period of Euro 10,138,360 and on 100,000,000 Ordinary Shares, being the
weighted average number of shares in issue during the period.
4. NET ASSET VALUE PER SHARE
The net asset value per Ordinary Share, based on the net assets as attributable
to ordinary shareholders at the period-end of Euro 106,138,360 divided by
100,000,000 Ordinary Shares in issue at the end of the period, amounts to Euro
106.1 per share.
5. DIVIDENDS
No dividends have been paid to date.
6. CASH AND CASH EQUIVALENTS
All cash and cash equivalents represents cash on current and deposit interest
bearing accounts..
7. SHARE CAPITAL
Number of Ordinary Shares Euro
Authorised
--------------------------------------------------------------------------------
Ordinary shares of Euro 0.01 each 250,000,000 2,500,000
--------------------------------------------------------------------------------
Called up, allotted and fully paid
--------------------------------------------------------------------------------
Ordinary shares of Euro 0.01 each 100,000,000 1,000,000
--------------------------------------------------------------------------------
SELECTED NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL INFORMATION (continued)
8. SHARE PREMIUM
The share premium arose on the issue of the Ordinary Shares and represents the
difference between the net asset value (share price) at which the shares were
issued, Euro 1 and the par value of one Euro-cent (Euro0.01). Issue costs amounting
to Euro 4,000,000 have been written off against the share premium account.
In accordance with the listing prospectus and under Guernsey Statute, an
application was made to the Royal Court of Guernsey to have the share premium
cancelled and re-designated as a distributable reserve.
9. INVESTMENT PROPERTIES
Euro
Investment properties carried at fair value as assessed by Jones
Lang LaSalle 95,800,000
--------------------------------------------------------------------------------
Total 95,800,000
--------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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