XXI Century Investments Public Limited (LSE: XXIC) announces that one of its subsidiaries concluded a sales agreement with a local developer, pursuant to which the developer will receive 100% of the property rights to Kvadrat-Balzaka shopping center in Kyiv, Ukraine, upon completion of its construction, expected in Q2 2009. The developer has agreed to finance the remaining construction costs to complete this project and to pay an additional US$2.98 million to the Company's subsidiary.
Historic Structures accent the tranquility of the view across the river.
Of this amount US$0.72 million has been paid and the balance is payable upon the completion of the shopping center. The Company has also agreed with the same local developer to buy his 20% share in the mixed-use project in Poltava for US$2.27 million, thereby providing XXI Century with 100% ownership of this project. The parties agreed to finalize this transaction by May 1, 2009.
The sale of Kvadrat-Balzaka implies a discount to appraised value, established by Jones Lang LaSalle as at June 30, 2008, of 38%. In contrast, the acquisition by the Company of the remaining stake in the Poltava project transaction reflects a discount of 97% to the project's appraised value. The values achieved in both transactions compare favorably to the discount to NAV reflected in the Company's current market capitalization.
Details of further transactions will be announced when the final conditions of such deals are firm.
Sale of two residential buildings
During September, October and November 2008, XXI Century sold over 1,500 m² in the recently commissioned premium class Capitoliy and business class Parus residential buildings in Kyiv to various local buyers. The Company's two operating shopping centers in Kyiv, Kvadrat Perova and Kvadrat Lukyanivka, both enjoy occupancy levels in excess of 98%.
Servicing debt obligations
The Company reports that, notwithstanding the continued problems in global capital and financial markets, which have also spilled over into Ukraine, and the increasing challenges arising from operating in the real estate sector in Ukraine, XXI Century is successfully meeting all short-term debt obligations. In this regard, the Company recently paid approximately US$15,1 million of interest and principal payments, comprising the semi-annual interest coupon on its US$175 million Guaranteed secured Notes due 2010, as well as principal and interest payments to local banks under its mortgage-backed credit lines.
The principal sources of cash enabling these timely payments arose from sales of unsold apartments in Capitoliy and Parus, both completed residential projects in the downtown area of Kyiv, and also sales of properties under development, Balzaka and Lisnyky. Major cutbacks in personnel and administrative expenses, which were initiated early in the fourth quarter, were also a contributing factor. However, the full impact of these reductions will be felt in Q1 2009.
Source: XXI Century