Terra Catalyst Fund TCF Trading Update - 14 January 2011
Terra Catalyst Fund TCF Trading Update
14 Jan 2011
RNS Number : 4380Z
Terra Catalyst Fund
14 January 2011
14 January 2011
Terra Catalyst Fund
Spazio Investments NV - Trading Update
Terra Catalyst Fund ("the Company") today announces a trading update for its
largest single investment, Spazio Investments NV ("Spazio") in which it holds
a 33.6% economic stake via its equity investment in Terra European Investments
BV ("TEI").
In the fourth quarter of 2010, Spazio completed on further sales of EUR 32.7m
comprising EUR 31.0m of investment properties and EUR 1.7m of development
properties. The investment properties were disposed of at a weighted average
discount of 12% to the appraised OMV at 31 December 2009. All the disposals
made in the quarter were at prices somewhat above the price implied in the
carrying value of Spazio within the books of TCF.
These sales bring the total completed disposals for the year ending 31
December 2010 to EUR 112.4m, comprising EUR 107.4m of investment properties
and EUR 5.0m of development properties. For the full year, the investment
properties have been sold at a weighted average discount of 6.6% to the
appraised OMV at 31 December 2009. This compares to total disposals of EUR
51.3m during the year ending 31 December 2009 sold at a 4.3% weighted average
discount to the appraised OMV as at 31 December 2008, and represents a major
step up in the rate of sales completions since the delisting of the company in
December 2009 and the appointment of Celtic to oversee the disposal process.
At a weighted average discount of 6.6% to the appraised OMV at the start of
the year, the disposal prices achieved during the course of 2010 were, on
average, significantly ahead of the weighted average discount implied by the
carrying value of Spazio in the NAV of TCF of approximately 18% (see notes
below). However, market prices for some of the kinds of income producing
properties owned by Spazio showed some weakening over the course of the year,
and so a prudent approach to the carrying value of Spazio in TCF remains
appropriate.
In addition to the completed sales in the quarter, Spazio signed two further
significant agreements. The first was the signing of "binding contracts" for
the sale of EUR 49.5m of the properties occupied by Prada SpA. A EUR 2.5m
deposit has been received on this transaction and the sale of the first
building (comprising EUR 7.0m of the total consideration) was formally
completed during the fourth quarter of 2010 and is included in the above
figures for the Q4 2010 disposals. The remaining EUR 42.5m of sales is
scheduled to conclude in various tranches over the course of 2011 and first
quarter of 2012 and the deposit is only refundable once the final transaction
is completed. This agreement secures a major transaction for Spazio and, in
the meantime, the company will continue to receive the rental income from the
properties until the date of formal completion.
The second significant agreement signed during the quarter was with the first
major tenant at Spazio's Eastgate Park development near Portoguaro to the
north of Venice. The lease agreement is for approximately 8,460 sq m,
comprising around a quarter of the scheme's vacant logistics space and is for
an initial term of 6 years. The agreement provides both a strong income
stream to Spazio and also, critically, starts to build activity on this high
quality development scheme. Whilst the industrial and logistics rental market
remains challenging in Italy, there has been some improvement during the
course of 2010 and Spazio currently expects that this will lead to further
leases and sales at the Eastgate Park development during 2011.
The EUR 32.7m of sales completions in the fourth quarter, together with the
agreements on the Prada portfolio and at Eastgate Park has made this the most
active quarter for Spazio in 2010. The forward pipeline for the first quarter
of 2011 already contains a significant volume of deals at an advanced stage of
negotiation and Spazio currently expects to continue to deliver an attractive
quarterly sales rate going forward.
Notes
As at 31 December 2009, the OMV of the property portfolio of Spazio determined
by CB Richard Ellis at EUR 668m and the adjusted EPRA NAV for that date is EUR
14.3 per Spazio share. Gross debt was EUR 384m, with EUR 67m of cash on the
balance sheet (EUR 47m of which was restricted). The company's net LTV was
just over 50%. Spazio's audited 2009 annual report and accounts has been made
available on the Terra Catalyst Fund website www.terracatalystfund.com
Based on 31 December 2009 financial data and the current valuation methodology
applied by the directors, TCF would have carried Spazio in its books at EUR
7.32 per share at that date which represents a 49% discount to Spazio's 2009
year end adjusted EPRA NAV. Within the EUR 7.32 figure, the individual
property assets of Spazio were included at a weighted average carrying value
which was approximately 18% below the 31 December 2009 OMVs. The rest of the
discount to Spazio's EPRA NAV represents a prudent provisions for fees and
administration costs expected to be incurred during the liquidation period.
** Ends **
ENQUIRIES TO:
Terra Catalyst Fund
Mike Haxby, Director
www.terracatalystfund.com
Tel +44 (0)1624 690 900
Fairfax I.S. PLC
James King/ Gillian McCarthy
Tel +44 (0)207 598 5368
This information is provided by RNS
The company news service from the London Stock Exchange
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