Eurocommercial Properties N.V. (âECPâ or the âCompanyâ) announces that it is today launching a non-pre emptive accelerated equity offering of up to 2.7 million new depository receipts (âDRsâ), representing approximately 8.6% of ECPâs outstanding ordinary share capital. Based on demand, ECP and ABN AMRO Rothschild, as sole global coordinator and bookrunner, may decide to increase the equity offering to up to 3.1 million new DRs in total, representing approximately 9.9% of ECPâs outstanding ordinary share capital.
Commenting on the offering ECPâs CEO Jeremy Lewis said: âThe proceeds of this offering will enable ECP to continue its strategy of improving and expanding the Companyâs shopping centres together with the purchase of additional properties that offer particularly attractive growth prospects. We intend to continue concentrating our activities on the retail sector in France, Italy and Sweden. We will remain attentive, however, to retail markets in neighbouring countries that offer suitable compatible investment opportunities.â
Rationale for the offering
The proceeds of the offering will be used partly to finance the purchase of the Karlstad shopping centre in Sweden (announced on 8 April 2005), as well as other retail properties for which negotiations are not yet finalized and the extension of a number of existing shopping centres currently under construction. This investment pipeline is expected to amount to about â¬ 210 million.
Based on current market rents, ECP expects the average weighted net yield from these properties (net rent divided by gross cost) to be just over 7%. ECP will continue to maintain its policy of limiting total external borrowings to a maximum amount equal to net shareholdersâ equity and financing its investments for the long term.
Details of the offering
Based on the closing price of â¬ 26.80 per DR on Euronext Amsterdam on 18 April 2005 the gross proceeds of the equity offering are expected to amount to approximately â¬ 72 million (if 2.7 million DRs are issued), or approximately â¬ 83 million (if 3.1 million DRs are issued). The new DRs will be eligible for the dividend for the financial year 2004/2005 and will be fully fungible with the existing DRs.
The offering is structured as a private placement outside the United States to institutional investors in accordance with Regulation S under the U.S. Securities Act of 1933, as amended.
ABN AMRO Rothschild is acting as sole global coordinator and bookrunner for the equity offering. Subscription for the DRs starts today and is expected to close no later than close of trading on Euronext Amsterdam on Tuesday 19 April 2005. ABN AMRO Rothschild and ECP reserve the right to accelerate the closing of the subscription period at any time.
Application will be made for the new DRs to be listed on Euronext Amsterdam and Euronext Paris. ECP expects settlement to occur on Monday 25 April 2005. Admission to listing and trading of the new DRs on Euronext Amsterdam is expected to take place on the settlement date and as regards Euronext Paris on a date after the settlement date.
ECP has agreed to a lock-up with ABN AMRO Rothschild until 90 days after the settlement date, subject to customary exemptions.
Trading update and outlook
Management states today that the income and expenditure of ECP remain in line with budget, and therefore the expectation for the dividend for the financial year 2004/2005 continues to be that it will be not less than that for the financial year 2003/2004. Management also notes that turnover growth in its shopping centres in the first two months of 2005 was in line with the average for 2004, so that rent to turnover ratios remain healthy, providing a sound basis for sustainable rental growth. In 2004 the average rent to turnover ratios were in France 5.2%, in Italy 5.6% and in Sweden 4.3%.
The third quarter results of ECP are expected to be published on 20 May 2005, although property revaluations will not be carried out unti