Treveria, the property investment company focused on German retail, has announced the termination of its management agreements with the Dawnay, Day Group (DDG) and a revised strategy.
Commenting, Ian Henderson, Chairman of Treveria, said, "The new arrangements set out in today's announcement are structured to provide the best opportunity to rebuild shareholder value over the medium term. Management links with the Dawnay, Day Group are now severed and continuity in the key personnel has been ensured. We look forward to continuing to work with our existing team led by Damian Wisniewski, Director of Finance, and Chris Kingham, Director of Property, with David Hunter as the non-executive Chairman of TAM, and to starting what I am sure will be a successful working relationship with Cushman & Wakefield.
"Since the Board announced a strategic review in June we have considered a number of options and opportunities presented to us. The conclusion we have reached is that the most appropriate course of action is to focus on the management of our existing portfolio by internalizing the asset management team and managing our balance sheet prudently, whilst ensuring we utilize our cash resources carefully.
"We remain confident that the portfolio offers the potential to deliver long term value. We have good quality well-located assets, which produce recurring income and provide significant asset management opportunities. We are glad that the unsettling period caused by the financial difficulties at the Dawnay Day Group is behind us and look forward to focusing on the important task of managing our assets to ensure we can extract value from them over the medium term."
In the Interim Statement dated 29 September 2008, the Board announced that it was considering a possible injection of new equity into the business with a preferred third party. This would have been linked to the award of an external management contract. Further analysis of this proposition was conducted and a number of permutations and combinations have been considered.
Feedback has also been received from shareholders.
The Board has now concluded:
it is most appropriate to focus on management of the existing portfolio by internalizing the asset management team rather than appointing an external third party asset manager; and
given the current share price, a capital injection at this point in time will not be in the interests of shareholders and it will be more appropriate to concentrate on managing the Group's existing balance sheet prudently.
The Group has an extensive portfolio that was independently valued at €2.2 billion at 30 June 2008 and has significant recurring cash flow. In addition, Treveria has over €75 million of cash at the parent company level. Therefore, the Board has decided to focus on internalization and cautious balance sheet management. Most of the Group's debt facilities are close to the upper limit of their respective
loan to value covenants and the Board expects to engage in a constructive dialogue with its creditors to find workable solutions in the event that market conditions deteriorate further. Major shareholders have indicated that they are supportive of this strategy.
Appointment of TAM as the new internal asset manager
Since DDG encountered its well documented financial difficulties earlier in the year, Treveria has been reviewing its options for alternative asset management operations. The Board has decided that the best course of action is for the Group to adopt an internal asset management structure. In this respect, TAM, a wholly owned subsidiary of Treveria, has assumed the asset management duties currently performed by DDTREAM. TAM was initially set up to secure employment for the employees who worked for DDTREAM who were made redundant as part of the wider DDG restructuring.
This new internalized asset management arrangement is expected to be more efficient than the existing DDTREAM contract.
Under the arrangement, employees currently involved in the da