THABANG MOKOPANELE

Property Editor

New Europe Property Investments (Nepi) said yesterday it concluded a sale and purchase agreement to acquire the shares in the holding company of European Retail Park (ERP) in Braila, Romania, from Romanian retail developer BelRom.

The group, which has a primary listing on the AIM market of the London Stock Exchange and a secondary listing on AltX, said the acquisition was expected to improve distributable earnings per share.

ERP Braila is a 143000m² site with 53000m² of gross lettable area and a 60000m² customer parking area with 1250 parking spaces. The retail park had already opened stores for two of its three main anchor tenants — Carrefour Hypermarket and Bricostore DIY.

The park also contains a 6900m² showroom and store for a Romanian furniture retailer, Staer, which is in the process of completion, as well as a multiple screen cinema development that is expected to be completed by the middle of next year.

Nepi had agreed on an acquisition debt-funding facility from KBC bank for an amount of à113m, of which à40m would be used to pay down existing debt on ERP Braila.

The facility is repayable at the end of 2014, with capital amortisation starting in 2011. As a result, the balance of the consideration payable for the shares was à23m, comprising a mixture of cash payable from the group’s own resources and the issue of vendor shares at a price of à2,026 per share.

The group said the precise cash and share mixture was at its discretion and would be confirmed in due course, but of the vendor shares, 3587148 would be subject to a lock-in agreement and would be held in escrow.

The acquisition would become effective from the date on which the vendor shares would be admitted to trading on AIM and the JSE, which was expected to be no later than October 19.

The group said it remained in negotiations to acquire certain other retail assets in Romania, which, if successfully concluded, may also have a material effect on its financial position and consequently on the share price.

In August, New Europe reported distributable earnings of 7,66c per share for the six months to June.

The group said its strategy was biased in favour of long-term leases and conservative gearing and had helped it weather the tough property market.

Its outstanding weighted average lease duration was 5,46 years at the end of June, and rental income had been in line with budgets for the first half of the 2009 financial year.

The group said that it was positioned to take advantage of investment opportunities that had arisen from the economic downturn.

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Source: Business Day