TIDMAGP
RNS Number : 5423O
Asian Growth Properties Limited
07 November 2016
7 November 2016
Asian Growth Properties Limited
("AGP" or the "Company")
Acquisition of an office building in the City of London
The Company is pleased to announce that on 7 November 2016, the
Buyers (both of which are indirect wholly-owned subsidiaries of
AGP) purchased from the Sellers the entire issued Units in the
Trust that owns the Property known as 20 Moorgate, London, EC2R
6DA, pursuant to the terms of the S&P Agreement for a total
consideration of approximately GBP154 million (approximately
HK$1,491.0 million) (before the Buyers' transaction costs and
expenses).
On Completion, the total consideration has been settled in the
following manner:
1. the Buyers paid the Sellers approximately GBP75 million
(approximately HK$726 million) in cash as consideration for the
entire issued Units in the Trust (subject to post-completion
adjustments); and
2. the Buyers also paid in cash, on behalf of the Sellers,
approximately GBP79 million (approximately HK$765 million) to the
bank's solicitors' account as repayment of the total Redemption
Amount due by the Sellers to their bank.
The AGP Group funded the Acquisition from its existing cash
resources and a new five year term loan facility of approximately
GBP100 million (approximately HK$968.3 million) from HSBC. The bank
loan is secured by a mortgage over the Property.
The Property is fully let to two tenants under long term lease
agreements. The office accommodation is occupied by the Prudential
Regulatory Authority (a regulatory body of the Bank of England)
until 30 June 2027 and the sole retail unit is let to Fuller, Smith
& Turner Plc until 24 December 2039. The valuation of the
Property as at 14 October 2016 by an independent valuer was
approximately GBP157 million (approximately HK$1,520.2 million).
The net profit before taxation and after taxation of the Trust
(including the change in fair value of investment property) for the
year ended 31 December 2015 were both GBP6.0 million (approximately
HK$58.1 million)). The Acquisition represents a net initial yield
of 4.4%.
Further details of the Acquisition are set out below.
Background and reasons for the Acquisition
Since the Company's admission to AIM, the Company has been
focused on developing its property portfolio in Hong Kong and
mainland China, however there is no geographical restriction to its
sphere of activities. It is the AGP Group's strategy to review and
optimise its property portfolio from time to time with a view to
achieving the greatest value for its Shareholders. Following the
disposal of several projects earlier this year, the Company has
been identifying potential acquisition targets in both local and
major international markets. The Acquisition is an excellent
opportunity for the Company to acquire a high quality commercial
property at a prime location in the City of London with a stable
rental income.
The Trustees (in their capacity as trustees of the Trust) are
the sole legal owners of the Property. Immediately prior to
Completion on 7 November 2016, the Sellers were the sole beneficial
owners of the Property and the legal and beneficial owners of all
the issued Units. Upon Completion, the Trustees (in their capacity
as trustees of the Trust) continue to be the sole legal owners of
the Property and the Buyers became the sole beneficial owners of
the Property as well as the legal and beneficial owners of the
entire issued Units.
The Property is a seven-storey office building developed in 2002
and located in the City of London, being less than 100 metres north
of the Bank of England, with approximately 34 metres of prime
frontage onto Moorgate. The Property provides approximately 154,854
square feet (approximately 14,386.3 square metres) of Grade A
office, retail and ancillary accommodation arranged over lower
ground, ground and seven upper floors. The valuation of the
Property by an independent valuer as at 14 October 2016 was
approximately GBP157 million (approximately HK$1,520.2
million).
The Property has a leasehold term of approximately 138 years
unexpired with a current head rent of approximately GBP750,000
(approximately HK$7.3 million) per annum geared to 10% of rents
received, subject to a minimum head rent of GBP500,000
(approximately HK$4.8 million) per annum. Under the terms of the
Property's head lease, the Trustees are required to provide a bank
guarantee in favour of the head landlord as security for the
Trustees' obligations as tenant under the Property's head lease,
including the Trustees' obligation to pay the head rent on behalf
of the Trust. The Company's majority shareholder, S E A Holdings
Limited, arranged such a bank guarantee of GBP3 million
(approximately HK$29.0 million) from HSBC in favour of the head
landlord.
The Property is fully let to two tenants under long term lease
agreements. The office accommodation is occupied by the Prudential
Regulatory Authority (a regulatory body of the Bank of England)
until 30 June 2027. The sole retail unit is let to Fuller, Smith
& Turner Plc until 24 December 2039. As a Guernsey trust, the
Trust is not required to prepare audited financial statements.
Based on the management accounts of the Trust, the rental income of
the Property for the year ended 31 December 2015 was GBP6.8 million
(approximately HK$65.8 million) (Year ended 31 December 2014:
GBP7.4 million (approximately HK$71.7 million)), which included the
effect of a rent free period. Based on current information, the AGP
Group expects the Property to generate a rental income of GBP7.5
million (approximately HK$72.6 million) per annum.
The Board considers that the Acquisition would enable the AGP
Group to achieve a reasonable return from rental income and
provides an excellent opportunity for the AGP Group to expand its
property portfolio by the addition of overseas properties with a
view to maximizing its value for AGP's shareholders.
The consideration for the Acquisition was determined after arm's
length negotiations between the AGP Group, the Sellers and the
Trustees with reference to, among others, the location, expected
rental income and potential for rental growth, market values of
similar properties in the adjacent location and the carrying value
of the Property.
Taking into account the prospects of the property market in
London and the carrying value of the Property, the Directors
consider that the terms of the S&P Agreement and the
Acquisition are fair and reasonable and in the interest of the
Company and the Shareholders taken as a whole.
The Directors have confirmed that, the existing tenants of the
Property, the Sellers, the Trustees and their ultimate beneficial
owners are independent of the Company and not a "related party" as
defined in the AIM Rules.
Summary of the S&P Agreement
Under the S&P Agreement, the Sellers agreed to sell, free
from all encumbrances, their respective Units to the Buyers for a
consideration of approximately GBP154 million (approximately
HK$1,491.0 million) which has been settled in the following
manner:
1. the Buyers paid the Sellers approximately GBP75 million
(approximately HK$726 million) in cash as consideration for the
entire issued Units in the Trust (subject to post-completion
adjustments); and
2. the Buyers also paid in cash, on behalf of the Sellers,
approximately GBP79 million (approximately HK$765 million) to the
bank's solicitors' account as repayment of the total Redemption
Amount due by the Sellers to their bank.
Completion of the sale of the entire issued Units to the Buyers
took place on 7 November 2016 immediately after the execution of
the S&P Agreement, when the Buyers paid (i) the consideration
for the Units to the Sellers and (ii) an amount equal to the
Redemption Amount to the bank's solicitors' account.
Under the S&P Agreement, the consideration paid for the
Units is subject to adjustments based on the NAV of the Trust.
Within 20 Business Days after the Completion Date, the Sellers
shall provide to the Buyers a pro-forma balance sheet containing,
among others, the Actual NAV as at the Completion Date in relation
to the Trust for their review. If the Actual NAV (as stated in the
final completion accounts and agreed by the relevant parties)
is:
(i) greater than the Estimated NAV, the Buyers shall pay to the
Sellers an amount equal to the difference between the Actual NAV
and the Estimated NAV; or
(ii) less than the Estimated NAV, the Sellers shall pay to the
Buyers an amount equal to the difference between the Actual NAV and
the Estimated NAV,
and the relevant party shall, within 10 Business Days after the
date on which the final completion accounts and the Actual NAV are
agreed, pay the difference between Estimated NAV and Actual
NAV.
If the Actual NAV is equal to the Estimated NAV, no further
payment is required by either party. Based on the information made
available to the Buyers, the AGP Group does not expect the
difference between the Estimated NAV and the Actual NAV to be
material.
Information on the Buyers, the sellers and the trust
Tycoon Honour Limited, the First Buyer and Worthy Merit Limited,
the Second Buyer, are investment holding companies and indirect
wholly-owned subsidiaries of the Company.
PFM EuroSelect Elf GmbH & Co KG, the First Seller, is a
limited partnership incorporated in Germany and before Completion
held 109,950 Units (99.95% of the issued Units) while Lapis
Grundstücksverwaltungs-GmbH, the Second Seller, is a private
company with limited liability incorporated in Germany and before
Completion held 50 Units (0.05% of the issued Units). The Sellers
are managed by PFM Private Fund Management GmbH.
Moorgate I Limited, the First Trustee, and Moorgate II Limited,
the Second Trustee, established the Trust in 2005 under the Trust
Instrument. The Trustees, acting in their capacities as trustees of
the Trust, are the sole legal owners of the approximately 138 years
leasehold interest in the Property known as 20 Moorgate, London
EC2R 6DA. Prior to Completion, the Sellers were the sole beneficial
owners of the Property. The Buyers became the sole beneficial
owners of the Property on Completion.
The carrying value of the assets of the Trust as at 14 October
2016 was approximately GBP157 million (approximately HK$1,520.2
million). As a Guernsey trust, the Trust is not required to prepare
audited financial statements. Based on the management accounts of
the Trust, the net profit before taxation and after taxation of the
Trust (including the change in fair value of investment property)
for the year ended 31 December 2015 were both GBP6.0 million
(approximately HK$58.1 million) (Year ended 31 December 2014:
GBP13.6 million (approximately HK$131.7 million). Upon Completion,
the assets and liabilities of the Trust will be consolidated into
the accounts of the AGP Group.
For the purpose of this announcement, an exchange rate of GBP1 =
HK$9.683 is used.
This announcement contains inside information for the purpose of
Article 7 of the Market Abuse Regulation (EU) No. 596/2014.
For more information, please contact:
Lu Wing Chi Tel: +852 2828 6363
Executive Director
Asian Growth Properties Limited
Richard Gray Tel: +44 207 886 2500
Andrew Potts
Panmure Gordon (UK) Limited
(Nominated Advisor)
The following definitions apply throughout this announcement
unless the context requires otherwise:
"Acquisition" the acquisition of all the issued
Units by the Buyers pursuant
to the S&P Agreement and the
payment of the Redemption Amount;
----------------------- ----------------------------------------
"Actual NAV" the NAV of the Trust as at 12:00
p.m. (midday) London time on
the Completion Date as determined
after Completion in accordance
with the S&P Agreement;
----------------------- ----------------------------------------
"AGP" or the "Company" Asian Growth Properties Limited,
a company incorporated in the
British Virgin Islands whose
shares are traded on AIM market
of The London Stock Exchange
plc (Stock code: AGP);
----------------------- ----------------------------------------
"AGP Group" AGP and its subsidiaries;
----------------------- ----------------------------------------
" AIM" AIM, a market operated by The
London Stock Exchange plc;
----------------------- ----------------------------------------
"AIM Rules" the AIM Rules for Companies
published by The London Stock
Exchange plc;
----------------------- ----------------------------------------
"Board" the board of Directors;
----------------------- ----------------------------------------
"Business Day" a day, other than Saturday,
Sunday or a day on which banks
are authorised to close in London,
Frankfurt, the British Virgin
Islands, Hong Kong or Guernsey
for general banking business;
----------------------- ----------------------------------------
"Buyers" the First Buyer and the Second
Buyer
----------------------- ----------------------------------------
"Completion" completion of the sale and purchase
of the Units pursuant to the
S&P Agreement on 7 November
2016;
----------------------- ----------------------------------------
"Completion Date" 7 November 2016;
----------------------- ----------------------------------------
"Director(s)" the director(s) of the Company;
----------------------- ----------------------------------------
"Estimated NAV" approximately GBP154 million
(approximately HK$1,491.0 million),
as set out in the pro-forma
balance sheet as at the Completion
Date in relation to the Trust
prepared in a form in accordance
with the S&P Agreement;
----------------------- ----------------------------------------
"First Buyer" Tycoon Honour Limited, a company
incorporated in the British
Virgin Islands with limited
liability and is an indirect
wholly-owned subsidiary of AGP;
----------------------- ----------------------------------------
"First Seller" PFM EuroSelect Elf GmbH & Co
KG, a limited partnership incorporated
in Germany;
----------------------- ----------------------------------------
"First Trustee" Moorgate I Limited, a company
incorporated in Guernsey and
acts in its capacity as trustee
of the Trust;
----------------------- ----------------------------------------
"HK$" the lawful currency of Hong
Kong for the time being;
----------------------- ----------------------------------------
"Hong Kong" the Hong Kong Special Administrative
Region of the People's Republic
of China;
----------------------- ----------------------------------------
"HSBC" The Hongkong and Shanghai Banking
Corporation Limited;
----------------------- ----------------------------------------
"NAV" the aggregate amount of the
fixed and current assets of
the Trust less the aggregate
amount of the liabilities of
the Trust as at the Completion
Date, as set out in the completion
accounts prepared in accordance
with the S&P Agreement;
----------------------- ----------------------------------------
"Property" the approximately 138 years
leasehold interest in the property
known as 20 Moorgate, London
EC2R 6DA, the title to which
is registered at the land registry
with title number NGL 779978;
----------------------- ----------------------------------------
"Redemption Amount" approximately GBP79 million
(approximately HK$765 million)
being the aggregate amount of
the bank loan and interest rate
swap redemption amount owed
by the Sellers to their bank;
----------------------- ----------------------------------------
"Second Buyer" Worthy Merit Limited, a company
incorporated in the British
Virgin Islands with limited
liability and is an indirect
wholly-owned subsidiary of AGP;
----------------------- ----------------------------------------
"Second Seller" Lapis Grundstücksverwaltungs-GmbH,
a private company with limited
liability incorporated in Germany;
----------------------- ----------------------------------------
"Second Trustee" Moorgate II Limited, a company
incorporated in Guernsey and
acts in its capacity as trustee
of the Trust;
----------------------- ----------------------------------------
"Sellers" the First Seller and the Second
Seller;
----------------------- ----------------------------------------
"S&P Agreement" the agreement relating to the
Acquisition entered into between
the Buyers, the Sellers and
the Trustees on 7 November 2016;
----------------------- ----------------------------------------
"Trust" the Moorgate Unit Trust, a unit
trust established in Guernsey
and constituted pursuant to
the Trust Instrument;
----------------------- ----------------------------------------
"Trustees" the First Trustee and the Second
Trustee;
----------------------- ----------------------------------------
"Trust Instrument" the trust instrument dated 15
September 2005 (as amended on
24 August 2016) relating to
the Trust;
----------------------- ----------------------------------------
"Units" the units of the Trust;
----------------------- ----------------------------------------
"GBP" Pounds sterling, the lawful
currency of the United Kingdom;
and
----------------------- ----------------------------------------
"%" per cent.
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This information is provided by RNS
The company news service from the London Stock Exchange
END
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