TIDMIERE
RNS Number : 9352Y
Invista European Real Estate Trust
14 September 2015
14 September 2015
INVISTA EUROPEAN REAL ESTATE TRUST SICAF
(the "Company")
Announcement of Enforcement of Security by the Company's Lenders
and Interim Management Statement
The Board of the Company announces that, following the expiry of
the standstill agreement in relation to certain ongoing events of
default with regard to the mezzanine loan facility provided by
Islay Investment S.à r.l., an affiliate of Blackstone Real Estate
Debt Strategies, ("Islay" or the "Mezzanine Lender"), Islay has
today called for repayment of the mezzanine loans by Invista
European Real Estate Holdings S.à r.l. ("IEREH"). Since IEREH has
not been able to repay the loans, Islay has called on the guarantee
of the loans by the Company and, since in turn the Company has not
been able to pay the amounts guaranteed, Islay has enforced its
security, by way of sale to Artillery Investments S.à r.l., TTNYR
Limited, TTNYR Artillery LLP and DPK Artillery LLP (together, the
"Purchasers"), over the Company's entire interests in IEREH,
Invista European Real Estate Finance S.à r.l. and Invista European
RE Pocking PropCo S.à r.l. (the "Subsidiaries") and any other
interests (including intra-group loans) held by the Company (the
"Enforcement"). The Enforcement involves the transfer of the shares
and all debt interests held by the Company in each Subsidiary to
the Purchasers.
The Enforcement followed a process as part of the strategic
review conducted by Eastdil Secured LLC through which the Company
had explored the sale or refinancing of its property portfolio. All
proposals received by the Company, both before and after the
adverse developments in respect of prospective future rental
income, implied a valuation of the Company's properties materially
lower than the most recent ones made by Savills, on which the
Company's reporting is based, including the unaudited Net Asset
Value referred to below. This may have reflected, inter alia,
factors such as contingent tax, the complexity and cost of the
group's corporate structure and the circumstances of any possible
sale, which may have differed from those assumed in the Savills
valuation. Although the Mezzanine Lender actively supported the
Company's efforts to conclude a transaction, those efforts were
ultimately unsuccessful and consequently, in the light of (amongst
other things) increasing projected cash shortfalls, it decided to
enforce its security by way of sale in a manner which left the
Company solvent, but without any value to distribute to
shareholders. As a result, the Company intends to seek the approval
of ordinary shareholders for a voluntary liquidation.
Following the Enforcement, although the Company has been
released from any further liability under its guarantee and will
remain solvent, it expects that there will be no value for
distribution to either ordinary or preference shareholders. The
Company therefore intends, in due course, to publish a shareholder
circular convening an extraordinary general meeting at which
shareholder approval will be sought for the de-listing and
voluntary liquidation of the Company.
Interim Management Statement
Pursuant to the requirement under Luxembourg law to make an
Interim Management Statement in respect of the period since 31
March 2015, the Company is now providing the following information.
As at 30 June 2015, the Company's unaudited Net Asset Value
calculated using International Financial Reporting Standards and
adjusted to add back deferred tax was EUR0.025 (GBP0.018) per
share, reflecting a decrease of EUR0.064 or 71.91% over the quarter
and GBP0.046 or 71.88% in Sterling. The unaudited Net Asset Value,
calculated under International Financial Reporting Standards, was
EUR0.021 per share.
The unaudited Net Asset Value reflects a decrease in property
valuation on a quarterly basis by EUR5.7 million or EUR0.02 per
share. The Company's unaudited Net Asset Value figure incorporates
the independent property portfolio valuation by Savills as at 30
June 2015.
Key events during the quarter and post quarter end were:
-- Portfolio valuation decreased by 3.82% over the quarter
(2.54% on a like for like basis) to EUR226.15 million.
-- During the quarter two assets were sold: Heusenstamm in
Germany and Girona in Spain, for aggregate net proceeds of EUR35
million.
-- Post quarter end, the Pocking property in Germany was sold
for EUR13 million.
-- Post quarter end, the Company received notification of the
application of default interest, which stood at a balance of
EUR790,417.97 outstanding as at 30 June 2015 which is EUR0.003 per
share.
-- A tenant default and the unexpected exercise of lease breaks
led to a material reduction, in the absence of new lettings, in
forecast rental income in 2016.
-- The previously announced strategic review was affected by
these adverse developments and proposals received for the
acquisition of the Company's property portfolio or its refinancing
indicated that no material value would be left for ordinary or
preference shareholders.
-- The Mezzanine Lender subsequently enforced its security over
the Company's property portfolio, leaving the Company solvent but
without any expected value for shareholders.
As at 30 June 2015, the Company's property portfolio was valued
by Savills at EUR226.15 million and comprised 26 assets located in
three countries. The portfolio value decreased over the quarter by
2.54% or EUR5.90 million on a like for like basis. As at 30 June
2015, the Company's portfolio generated gross income of EUR18.4
million per annum, representing a gross income yield of 8.17% and a
net income yield of 6.97%. The portfolio weighted average lease
term to break was 3.52 years and 6.17 years to expiry. The
portfolio void level by income as at 30 June 2015 was 17.3%.
Post quarter end and as announced by the Company on 13 July
2015, a tenant default as well as the unexpected exercise of lease
breaks brought about a material decline in the portfolio's revenue
generation, which, combined with forecast rent reductions as a
result of ongoing lease negotiations and previously foreseen tenant
breaks, as well as the sale of the Pocking property, led to a
forecast annual gross rental income as at 1 January 2016 of EUR13.6
million. The forecast portfolio vacancy as at 1 January 2016 also
increased to 26%.
As at 30 June 2015, the Company had drawn down a total of
EUR181.4 million of senior and mezzanine debt, which was reduced to
EUR168,712,132.24 post the quarter end as a result of the
completion of property sales. As reported in the Announcement of
Half Yearly Results and Unaudited NAV published on 29 May 2015, the
Company had been in an ongoing event of default in relation to the
Interest Cover and Projected Debt Yield Covenants of the Mezzanine
Loan Facility. In respect of these ongoing events of default, the
Mezzanine Lender issued the Company with a Standstill letter, in
which the events of default were not waived, but the Mezzanine
Lender stated that it would not take any action as a result of
them. These standstills were renewed periodically throughout the
quarter and post quarter end and expired at 23.59 p.m. BST on 13
September 2015, following which the Mezzanine Lender enforced its
security by way of sale, thereby extinguishing the outstanding
level of debt and leaving the Company without any borrowings and
solvent, but without any expected value for shareholders.
The Enforcement followed a process as part of the strategic
review conducted by Eastdil Secured LLC through which the Company
had explored the sale or refinancing of its property portfolio. All
proposals received by the Company, both before and after the
adverse developments in respect of prospective future rental
income, implied a valuation of the Company's properties materially
lower than the most recent ones made by Savills, on which the
Company's reporting is based, including the unaudited Net Asset
Value referred to above. This may have reflected, inter alia,
factors such as contingent tax, the complexity and cost of the
group's corporate structure and the circumstances of any possible
sale, which may have differed from those assumed in the Savills
valuation. Although the Mezzanine Lender actively supported the
Company's efforts to conclude a transaction, those efforts were
ultimately unsuccessful and consequently, in the light of (amongst
other things) increasing projected cash shortfalls, it decided to
enforce its security by way of sale in a manner which left the
Company solvent, but without any value to distribute to
shareholders. As a result, the Company intends to seek the approval
of ordinary shareholders for a voluntary liquidation.
For further information, please contact:
Tom Chandos
Chairman, Invista European Real Estate Trust SICAF
c/o Internos Global Investors +44 20 7355 8800
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGRGDCBXBBGUS
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September 14, 2015 03:33 ET (07:33 GMT)
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