4 October 2017
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this information is considered to be in the public domain
Globalworth Real Estate Investments Limited
("Globalworth" or the "Company")
Globalworth expands into Poland via strategic investment in Griffin Premium RE.. N.V.
The Board of Globalworth (AIM: GWI) is pleased to announce that its subsidiary Globalworth Asset Managers SRL has entered into a conditional investment agreement to acquire a minimum of 50.01% and up to 67.90% of the issued share capital of Griffin Premium RE.. N.V. ("GPRE"), a Dutch entity listed on the Warsaw Stock Exchange (the "Investment").
GPRE is a pure-play Polish real estate platform that primarily owns high-quality office and mixed-use assets located in Warsaw and across a number of other key cities, notably Wroclaw, Lodz, Krakow and Katowice. Its portfolio comprises six office and three mixed-use (office and retail) properties. As disclosed in conjunction with GPRE's H1-2017 report, the portfolio has a gross leasable area of 171k sq m, an aggregate value of €508 million, annualised net operating income of €33.9m, occupancy of 97.6% and a weighted average lease term of 4.5 years (all as at 30 June 2017). The office space is predominantly leased to a diversified mix of blue-chip tenants, including Infosys, Hewlett-Packard, Capita, Phillips and Deutsche Bank, with leading retail tenants including LPP Group and Inditex Group. As at 30 June 2017, GPRE reported unaudited EPRA NAV of €247.2m.
GPRE has also secured an attractive investment pipeline, including a forward funding agreement for an office in Wroclaw currently under development and a 25% interest in three offices in Warsaw currently under development for which the company has an option to acquire the remaining 75% stake upon completion, all expected to be delivered over the next two years. In addition, as announced by GPRE today, it has contracted to acquire a further three high quality office properties in Wroclaw, Gdansk and Katowice from Echo Polska Properties for an aggregate purchase price of €160 million, which are expected to be acquired before 31 January 2018. For more information on GPRE, please visit www.griffin-premium.com.
The Investment will be effected by way of a public tender offer available for subscription by all holders of shares in GPRE which the Company will make, at a price per GPRE share of PLN 5.50 ("Tender Offer"), subject to the maximum resultant shareholding by the Company in GPRE being 67.90%. The offer price implies an aggregate equity value for GPRE of PLN859m, equivalent to €199.0m[1], and reflects a premium of 8.5% to the average weighted market price since the first day of listing on the Warsaw Stock Exchange, being 13 April 2017. Depending on the outcome of the public offer (further details are given under the section 'Nature of Transaction' below), the total consideration payable by the Company for the Investment will range between PLN429m (€99.5m1) at the minimum 50.01% shareholding to a maximum of PLN583m (€135.1m1) at the maximum 67.90% level, payable in cash in Polish Zloty. This will be met from the Company's existing cash resources, last reported at €284m as at 30 June 2017, as a result of the December 2016 equity raise and the June 2017 Eurobond issue. The total consideration for the Investment will be confirmed when the Tender Offer closes, expected to occur prior to 31 December 2017, at which point GPRE will be consolidated into the Company's financial statements. The Company may look to make further investments in GPRE in the future should the opportunity arise, subject to a full assessment and approval processes it has in place, and which the Company will disclose subject to its regulatory requirements.
Dimitris Raptis, Deputy Chief Executive Officer and Chief Investment Officer of the Company, commented: "As our largest investment to date and our first transaction outside of the Romanian market, this expansion into Poland, the largest market in Central and Eastern Europe, is a pivotal development in Globalworth's strategy to establish itself as the region's leading office investor. As previously stated, we have prioritised the Polish market as a core target for expansion due to its size, liquidity, strong fundamentals and depth of opportunities. Drawing on GPRE's strong experience and excellent reputation in the Polish market, we will continue to grow its portfolio in Poland as we strive to become the partner of choice for the wide variety of high-quality tenants looking to expand in the region".
Malgorzata Turek, Chief Executive Officer of GPRE, commented: "GPRE looks forward to welcoming Globalworth, one of the region's most respected investors and accomplished landlords, as a committed long term strategic investor in our company. This strategic investment will be a defining moment in the future evolution of our business, providing GPRE with a solid basis for future growth and value creation for our shareholders. We believe that the Polish market remains very attractive and look forward to leveraging Globalworth's experience and industry knowledge in our ambition to become the leading institutional office investor in Poland. The acquisition of a high-quality office portfolio from Echo Polska Properties also announced today represents a major step towards achieving this ambition".
Nature of Transaction
The Investment is to be acquired pursuant to a conditional agreement with Griffin Netherlands II B.V. and GT Netherlands III B.V., two Dutch entities that are indirectly controlled by Oaktree Capital Management Group LLC ("Oaktree"), and which together hold approximately 47.92% of the issued share capital of GPRE. The transaction has been structured with the objective that GPRE will retain its listing on the Warsaw Stock Exchange and a free float of public investors following completion of the Investment. Oaktree has agreed to subscribe in the Tender Offer to the extent required to cause the Company to acquire a minimum of 50.01% but no more than 67.90% of the issued share capital of GPRE taking into account subscriptions for the Tender Offer by other GPRE shareholders. Depending on levels of subscription by other GPRE shareholders, Oaktree may determine not to proceed with the transaction if it would otherwise be left with a shareholding in excess of 10% following the Tender Offer, which, if so determined by Oaktree, would result in the Investment no longer proceeding. The completion of the Tender Offer is dependent on remaining GPRE Shareholders subscribing for the Tender Offer in respect of at least 2.11% of the issued share capital of GPRE so as to cause the Company to acquire a minimum shareholding of 50.01%. The Company has separately received an irrevocable commitment from Griffin Investments sp. z o.o. holding approximately 3.62% of GPRE for subscriptions in the Tender Offer to the extent required to cause the Company to acquire such additional 2.11% of the issued share capital of GPRE. The Company has structured the terms of the Investment to ensure that its maximum percentage shareholding on completion of the Tender Offer will not exceed 67.90%.
The Investment is also subject to (i) merger control approval in Poland; (ii) the adoption by the general meeting of the GPRE shareholders of resolutions to approve the ability to issue convertible notes (to the Company or affiliates) and conditional changes to the composition of the board of directors, including the appointment of Ioannis Papalekas, Chief Executive Officer and Founder of the Company and Dimitris Raptis, Deputy Chief Executive Officer and Chief Investment Officer of the Company as directors of GPRE; (iii) the Company entering into an organisation agreement with GPRE and (iv) other customary conditions related to conduct of the business and material change of circumstances.
Additional Information
The Company remains committed to targeting a conservative capital structure over time using an appropriate mix of debt and equity funding. In so doing the Company will seek to support ongoing expansion while meeting its objectives of enhancing shareholder returns and achieving a target leverage ratio of 35% LTV. The Company's core shareholders are very supportive of the Investment and Globalworth's broader strategic vision.
The Investment is in line with the Company's stated investment policy and represents a Substantial Transaction pursuant to the AIM Rules. Further information required to be disclosed pursuant to Schedule 4 to the AIM Rules: the profits attributable to GPRE for the year ended 31 December 2016 were €14.6m, which reflected its results in the financial year prior to its IPO in April 2017. The gross assets of GPRE at 30 June 2017 were €569.4m.
Intention to Explore Move to the Main Market of the London Stock Exchange
Subject to completion of the Investment, the Company intends to explore obtaining a Premium Listing on the Official List of the UK Listing Authority in 2018. No decision has been made to proceed with a move to the Official List; any decision to proceed would be subject to, inter alia, satisfying eligibility criteria and obtaining customary approvals.
The Board of Globalworth will continue to keep shareholders updated as appropriate.
Enquiries:
Andrew Cox Tel: +44 20 3026 4027
Head of Investor Relations & Corporate Development
Panmure Gordon (Nominated Adviser and Joint Broker) Tel: +44 20 7886 2500
Andrew Potts
Jefferies (Joint Broker) Tel: +44 20 7029 8000
Stuart Klein
Milbourne (Public Relations) Tel: +44 7903 802 545
Tim Draper
About Globalworth
Globalworth is a real estate investment company active in Central and Eastern Europe, and has become the leading office investor in the Romanian real estate market. Globalworth acquires, develops and directly manages high-quality office and logistics/light-industrial real estate assets in prime locations, through which it benefits from a strong rental income profile from high quality tenants from around the globe. With approximately 70 professionals managing it, Globalworth's portfolio, as at 30 June 2017, was valued in excess of €1bn, of which 90% is in income-producing assets and over 80% in the office sector. Globalworth has a strong and supportive investor base, having been listed on the AIM Market of London Stock Exchange since 2013 and in 2017 issued its debut Eurobond on the Irish and Bucharest stock exchanges.
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IMPORTANT NOTICE:
No public offer of securities is being made by virtue of this announcement.
This announcement has been prepared for the purposes of complying with the applicable laws and regulations of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "targets", "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward looking statements include all matters that are not historical facts and involve predictions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies and the industry in which it operates. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. Save as required by law or regulation, the Company disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements in this announcement that may occur due to any change in its expectations or to reflect events or circumstances after the date of this announcement.
