Property investment fund Intervest Retail has sold its factory outlet center 'Factory Shopping Messancy', located in Messancy, Luxembourg, for 12 mln. The buyer is a property fund managed by Henderson Global Investors.
Factory Shopping Messancy.
Factory Shopping Messancy, which represents approximately 10% of the value of the investment fund's portfolio, comprises 50 shops on a retail surface area of 18,466 m². A factory outlet is a concentrated supply of shops in which producers can offer their products directly to customers at considerable discounts (at least 25% below recommended retail prices). In addition, these products must be the latest of a range, last season's products, slightly damaged or be part of overstocks or test products.
The reason for the sale is that the outlet centre, despite the commercial efforts of the investment fund, has a negative operating result, and that no improvement is anticipated in the short term. As a result of the sale, the occupancy rate of Intervest Retail's total portfolio will rise from 96,5% to 99,3%.
The management committee of the investment fund expects that the sale will strongly improve Intervest Retail's operating result. Not taking into account new investments, through this sale the 2008 distributable profi t is expected to rise by approximately 2 mln. compared to the forecasted distributable profi t of 2007. As a result, the gross dividend per share in 2008, not taking into account other developments such as investments, rent improvements or interest rate changes, is expected to rise by 40 eurocents or 25%.
The selling price of the centre is 10,5 mln. below the latest published book value (fair value) as at September 30, 2007. Taking into account additional costs (including a VAT regularisation), the realised capital loss amounts to approximately 14,0 million, which will be charged to the undistributable reserves of the investment fund. The fair value of the portfolio of the investment fund after the sale of the outlet centre amounts to 273 mln. Jean-Paul Sols, CEO of Intervest Retail: 'This disposal represents a very important step towards improving the return of the investment fund. In spite of the capital loss realized, the sale will have an immediate positive impact
on the dividend which Intervest Retail can distribute to its shareholders. The financial means released, moreover, will be used to make investments that yield a solid return.'
Source: INTERVEST RETAIL