Rutley European Property Limited announces its intention to list on the London and Channel Islands Stock Exchanges and raise up to £200m
Date: October 2006 | 
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London, 6th November 2006 - Rutley European Property Limited (“REPL”), a European commercial real estate investment company managed by Rutley Capital Partners LLP (“the Manager”), which is owned by Knight Frank LLP, is to apply to list on the London and Channel Islands Stock Exchanges and at the same time undertake a placing and public share offer to raise up to £200 million by way of an issue of C shares.
The Admission and issue is being sponsored by Cenkos Securities plc which is also acting as joint placement agent with Knight Frank Corporate Finance Limited.
REPL’s objective is to generate a geared internal rate of return of at least 12% by investing in European commercial properties in the office, industrial and retail sectors.
REPL is currently a private Guernsey company owned mainly by institutional investors. It has acquired, and/or committed to acquire, a portfolio of 12 properties for approximately £108 million located in Germany and Poland and is in the process of acquiring additional properties for circa £167 million in Poland, the Czech Republic and Belgium. The majority of these properties were sourced off-market. The gross blended yield of the existing portfolio is 6.84%.
The primary investment focus is on property in Germany, Poland, the Czech Republic, Hungary, Belgium, Switzerland and the Netherlands.
In view of the numerous investment opportunities currently being reviewed by the Manager in REPL’s target commercial property markets, REPL is seeking to raise additional equity via a public offer and placing of up to 200 million C shares at 100p each.
The Manager seeks to identify assets that have the potential for rental growth and/or yield compression and the potential for enhanced returns via active property management.
REPL is targeting an annualised gross dividend yield on its existing shares in respect of the period from admission to 31 December 2007 of 6 per cent with semi-annual dividends expected to be paid in June and December starting in 2007. (This does not represent a profit forecast).
The Placing and public offer
So as to avoid dilution to the existing shareholders, the proceeds of the issue of C shares will be held as a separate pool until they have been at least 75% invested in properties at which point the C share assets will be merged with the existing portfolio and the C shares will merge with the existing shares.
The Manager has identified and is pursuing property assets worth approximately £455 million for the C share pool. These properties are diversified both geographically and by sector. The gross initial yield of these properties ranges between 6 per cent and 7.5 per cent.
REPL is targeting an annualised gross dividend yield of 6.2 per cent on the C shares in respect of the period from admission to 31 December 2007 paid semi-annually in June and December. (This does not represent a profit forecast).
The initial net asset value per C share, immediately following admission, is expected to be 96.5 pence.
REPL benefits from a structure under which, subject to a special resolution of REPL to the contrary, the property portfolio will be realised from 31 December 2009 and the realisation proceeds distributed to shareholders up to 31 December 2013 at which stage REPL will be wound up.
The Manager is incentivised, inter alia, through a performance fee structure based on realised returns.
EXPECTED TIMETABLE *
15 November 2006. Prospectus published
16 November Admission of Shares
8 December Close of Placing and Offer for C Shares
14 December Admission of C Shares
*Subject to the approval of the UK Listing Authority and Guernsey Financial Services Commission.
Nick Burnell, Partner of Rutley Capital Partners, said:
"Investment in the European real estate market has grown substantially over the last decade as transparency and access to markets has improved. Growth has been fuelled by low costs of borrowing throughout the continent and increasing focus upon the resilient performance of the property sector in contrast to the volatility of the equities market.
"The ten new EU member states continue to be drivers of growth with GDP levels considerably higher than within the traditional European hegemony. Following a poor performance in 2005, many of the new accession countries' growth rates are expected to rebound in 2006 reflecting the improving market conditions across the region.
"Properties will be selected and acquired through a "bottom up" research based approach that seeks to understand the value of properties, as opposed to their market prices, so as to exploit property market imperfections."
This announcement is not for distribution directly or indirectly in or into the United States, Canada, Australia or Japan. This announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire C Shares in the capital of Rutley European Property Limited in the United States, Canada, Australia or Japan or any jurisdiction in which such an offer or solicitation is unlawful. The C Shares referred to in this announcement have not been and will not be registered under the Securities Act and may not be offered or sold within the United States absent registration or an exemption from registration. No public offering of securities will be made in the United States, Canada, Australia or Japan.
This announcement has been communicated by Cenkos Securities plc, which is authorised and regulated in the United Kingdom by the Financial Services Authority, and does not constitute an offer to sell or a solicitation of an offer to purchase any securities. The price of shares may go down as well as up and investors may not get back the full amount invested on disposal of the shares.
Consent under the Control of Borrowing (Bailiwick of Guernsey) Ordinances,1959 to 1989, has been obtained to this issue. Neither the Guernsey Financial Services Commission nor the States of Guernsey Policy Council takes any responsibility for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it.
Cenkos Securities plc is acting exclusively for Rutley European Property Limited and no one else in connection with the placing and offer for subscription and will not be responsible to anyone other than Rutley European Property Limited for providing the protections afforded to clients of Cenkos Securities plc nor for providing any advice in relation to the placing and offer for subscription or any other matters referred to in this announcement.
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For further information, please contact:
Nick Burnell, Partner
Rutley Capital Partners
Tel: 020 7861 1230
Will Rogers
Cenkos Securities plc
Tel: 020 7397 1920
Nick Miles/Louise Hatch/Tilly von Twickel
M:Communications
Tel: 020 7153 1516
Notes to Editors
Rutley Capital Partners LLP
The Manager is a specialist manager of international real estate offering investment management services to institutions and private investors.