Homburg Invest Inc. has approved an agreement with certain parties in the Netherlands, one of which is non-arm's length, whereby Homburg will acquire four commercial properties located in the Netherlands for an aggregate purchase price of €37.6 million. The acquisition is expected to close on or about November 14, 2006, subject to normal conditions.
The four properties, which include Tarasconweg 2, Franse Baan 606 in Eindhoven, Valkstraat 14 in Sittard, Corkstraat 38-46/Sheffield 21-39/Suttgartstraat 30-44 in Rotterdam and Beelaarts van Bloklandstraat 10-14/Reitse Hoewvenstraat 233-241 in Tilburg, will be purchased through limited partnerships controlled by Homburg and for which Homburg L.P. Management Inc. acts as a general partner.
Of the total purchase price and costs, approximately €5.5 million will be paid in cash, €31 million will be settled by mortgage financing and approximately €4.5 million will be paid through the issuance of 1,000,000 Class A Subordinate Voting Shares of Homburg (the Class A Shares) at a deemed price of €4.50 per share.
The acquisition of the Properties constitutes a "related party transaction" as defined in Ontario Securities Commission Rule 61-501 - Insider Bids, Issuer Bids, Business Combination and Related Party Transactions ("Rule 61-501") as the four Properties are being purchased from Stollburgh B.V. and SUV B.V. Stollburgh is owned by Mr. Richard Homburg, a controlling shareholder and Chairman and Chief Executive Officer of Homburg, and Mr. Richard Stolle, President and Chief Operating Officer of Homburg. Stollburgh owns the Tilburg property and SUV B.V. owns the Sittard, Rotterdam and Eindhoven properties. Stollburgh and Fortress Participaties B.V. each own 50% of SUV B.V. In the aggregate Stollburgh owns a 31% and SUV B.V. owns a 69% interest in the properties which will result in 655,000 and 345,000 shares being issued to Stollburgh and Fortress respectively.
The Acquisition of these Properties in the Netherlands fits well within Homburg's strategic plan as outlined in the 2005 Annual Report of Homburg. In 2004 the purchase of quality properties in Canada became much more difficult as competition in the marketplace was prepared to earn lower and lower cap rates thereby pushing up the value of Canadian properties significantly. As a result, the Company moved into the direction of acquiring land for development and existing properties for redevelopment in Canada while looking at investment prospects in Europe and the United States to take advantage of opportunities that make themselves available in those much larger real estate markets. This Acquisition is part of a series of transactions in which Homburg has engaged to meet Homburg's goals over the past year.