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(ECDC.L) European Convergence Development Company PLC Buy/Sell
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| Date/Time | Headline | Source |
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| 11-02-10 | RNS |
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RNS Number : 9901G European Convergence Develop. CoPLC 11 February 2010 8th February 2010 EuroPean convergence development company plc ("ECDC" OR "THE COMPANY") Shareholder Update: October 2009 to 31st December 2009 The purpose of this document is to update shareholders with new developments since the Company's last shareholder update report in September 2009. This latest update covers the developments during Q4 2009, but should be read in conjunction with all prior reports, which provide commentary on the historical evolution of the Company's business, and the associated detailed background information.
ROMANIA Political & Economic Update On 6th December Romanian voters returned the centre-Right President Traian Basescu for a second 5 year term. The slim electoral margin (50.3%) was legally challenged by the centre-Left opposition but the challenge was rejected by the Constitutional Court on 14th December 2009. A two month political vacuum delayed further economic reforms, and crucially further emergency aid from the IMF. Earlier in 2009, Romania had received a EUR 20 bn loan from the IMF to avert a balance of payments crisis. After their last visit the IMF officials expressed their commitment in releasing the second and third instalments of the above mentioned loan in amount of EUR 3.3 bn, by early March 2010. At the end of September 2009 the Romanian economy had swung from one of the fastest growing economies in the EU in GDP terms, to a severe 7.4% contraction. At the end of November GDP had improved slightly to a 7.1% year-on-year contraction. Labour unemployment had almost doubled to 7.5% in November 2009, compared to 4.4% in December 2008 and, symptomatic of declining consumer demand, annualised inflation for 2009 stood at 4.7% compared to 6.3% in 2008, with Q4 inflation at 1.4%. Romania Market Overview Residential Property
The programme is however limited in scope, with the maximum amount guaranteed capped at EUR57,000. This has tended to assist sales in lower value apartments rather than mid-range apartment schemes such as Asmita Gardens. Nevertheless, it is an important incentive to the market chain, underpinning the entry-level home buyers and creating liquidity for second time buyers. Office Property Despite the fact that Bucharest has always encountered a shortage of prime purpose-built office space compared to other CEE Markets, by the end of the year prime yields had decompressed from sub-6% to 9%, prime rents had fallen by 16% from their peak, and prime vacancy rates were at 5%. This decline appears to have plateaued in Q4 2009 and take-up is expected to improve in 2010. The mid-term prospects for this segment are encouraging due to the supply economics. It is also extremely important to distinguish between the sub-markets of the CBD and out-of-centre office supply. Despite overall vacancy rates in Bucharest stated at 15.5%, at 2009 year end, the CBD vacancy rate for Grade A office space was only 5%. Since the beginning of the year a recent letting of 9,000 m2 has absorbed much of the supply. This in turn provides Bucharest with a residual CBD vacancy rate of around only 1% at this current time. This development is very encouraging for the letting prospects and future rent levels of ECDC's 'Cascade' office project, discussed in more detail below.
ROMANIAN ASSETS Asmita Gardens Project Update Asmita Gardens is a residential development of 758 apartments, being delivered in seven tower blocks in two phases. As at 31st December 2009 the following position was reported:- · Phase 1: 324 apartments. Completed on 31st July 2009, and legally certified ('TOC'-'Take-over Certificate' - right to occupy) on 19th June 2009; and
During the period under review the focus of the development team has been to convert pre sales into completed sales and encourage buyers to move into their apartments. At the end of the year the following had been achieved:
As expected unit sales progress is slow and challenging. Given the soft market conditions the Manager estimates that the current revenue estimates for the contracted units will come under additional pressure for the upcoming period. The Manager has formed the view that it is important to preserve sales and facilitate occupancy of the apartments as this will considerably assist the sales and marketing initiatives whilst paying down debt. New initiatives alongside a step-up in visible promotion of the development have been implemented in order to generate buyer interest. The on-site sales office is reporting an increase in enquiries and visitor numbers. Additionally in the last quarter, a new COO has been appointed for the project who is mandated to secure the timely release of apartments in Phase 2 and drive the sales and occupation of apartments. Cascade Project Update At the end of December, the property was 75% pre-let by area, with a further 5% under heads of terms. Since the year end, a new lease for 635 m2 has been signed and heads of terms have been entered into for a further 1,145 m2 (being a further 7% of the lettable area). Negotiations are currently underway with 3 further prospective international tenants. This is despite the challenging market conditions experienced during 2009, described in the market commentary. Since the pre-lets were agreed the pace of leasing has significantly declined, and rental levels have declined 16% from their market peak of around EUR 20-22 m2 to today levels of EUR 17-18 m2. This prognosis for the CEE property market is likely to be short-lived as the significant undersupply of 'Grade A' office space in the Bucharest CBD zone indicates robust medium-long term prospects for this investment. This view is supported by the very low level of remaining supply, which will have a beneficial impact on future rental expectations. Baneasa There have been no further developments since the last Shareholder Update. The Manager, in conjunction with the Partner continues to seek a major pre-let. Committing to the construction of any development on a speculative basis under the current market conditions is not advisable. Significant recent improvements to the nearby DN1 road infrastructure have significantly improved the accessibility, and hence future marketability of the site.
BULGARIA Bulgaria-Retail Property Political & Economic Update Parliamentary elections held in July 2009 gave a decisive victory to Boyko Borisov's GERB party; a new centre-Right party ousting the centre-Left Government. The new Government's siren promises further economic reform whilst maintaining a policy of fiscal conservatism, zero budget deficits and a vow to tackle corruption. Economic problems as a result of the worldwide recession have been experienced in Bulgaria, in common with the rest of the smaller EU economies. By Q3 2009, GDP had fallen 5.4% year - on - year and the labour unemployment rate rose to 9.1% in Q4 2009, compared to 6.3% at the end of December 2008. Again in line with many EU economies, inflation has been restrained as a symptom of poor consumer confidence as well as rising joblessness. The average annual inflation rate for 2009 was 2.8% as opposed to 7.8% in 2008. Notably the year-on-year inflation in December 2009 was only 0.6% - Bulgaria having recorded deflation in 5 of the preceding 12 months. Bulgarian Market Overview Retail Property Market conditions in Bulgaria have remained very challenging throughout the period, and in line with many CEE markets have suffered from poor investor sentiment, and a very restricted availability of bank debt finance. This coupled with a supply overhang of committed developments that opened in 2009 further exacerbated the difficult market conditions. Rents and capital values are not expected to recover in the near term, indeed the last 2 years has seen Bulgarian retail property yield decompression from 7% to >10% , and peak rent levels fall by one third. Inevitably there has been a near term impact on capital values, and little real recovery is expected to be seen in the market until Q4 2011.
BULGARIAN ASSETS Galleria Plovdiv Project Update Galleria Plovdiv has recently agreed to lease 10,798 m2 to Carrefour to anchor the development with a hypermarket platform. This is a significant development, which will underpin the operating income with a very high quality rental stream. Currently leases signed or under negotiation amount to 75% of the GLA. In the three months under review the Manager has been in detailed renegotiations with the debt provider and the Partner to restructure the debt to ensure a successful opening. The Manager is pleased to confirm to shareholders that, with all parties committed to the success of the project, those negotiations have been successfully concluded. ECDC will not have to inject any further equity into the project other than that already notified to shareholders, and there are no significant changes to the borrowing terms and conditions. Having agreed the restructuring of the debt all parties are now focused on opening the Mall by the end of March, 2010. Rousse Mega Mall Project Update The project is a 17,500 m2 GLA retail shopping mall, located in the centre of the city of Rousse. Construction is progressing within the budget but completion has been postponed until September 2010, due in part to a public funded road improvement scheme leading to the development being scheduled for completion in June 2010 and to accommodate tenants' preferences. As with Plovdiv and national trends, the letting market in Rousse is extremely challenging. Total space let or under negotiation is still around 50% of the GLA though there has recently been observed a pick up in activity and interest but from depressed rental levels. There will be a step up in the lease marketing efforts in 2010 to convert occupier interest into pre-lets. Bourgas Retail Mall There has been no further progress made on this development since there has been no improvement in either the Banking or Retail market conditions since the last Shareholder Update Trade Centre Sliven There has been no further progress made on this development since there has been no improvement in either the Banking or Retail market conditions since the last Shareholder Update The strategy of the Manager The key focus over the next 18 months will be to concentrate on leasing and sales and to establish a stabilised investment platform to protect and enhance future value. Added value by an energetic and targeted marketing programme will enhance currently depressed exit IRRs, in what has been extremely difficult market conditions in both countries. A major focus will be on the quality of the cash flow, and placing an emphasis on investment grade anchors and occupational tenants, rather than a passive approach awaiting yield compression. At that stage a more scientific approach - through independent valuation - to exit IRRs can be established for the benefit of investors. The Manager has not undertaken a recalculation of the IRRs on any of the four projects because of the lack of comparable transactions and the visibility on exit yields in this market. This information is provided by RNS The company news service from the London Stock Exchange END
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| 09-02-10 | RNS |
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RNS Number : 8551G European Convergence Develop. CoPLC 09 February 2010 9 February 2010
EUROPEAN CONVERGENCE DEVELOPMENT COMPANY PLC ("ECDC" OR "THE COMPANY") Conclusion of Refinancing of Galleria Plovdiv AD European Convergence Development Company PLC ("ECDC" or the "Company") announces that, further to the announcement of 20 July 2009, it has successfully concluded refinancing negotiations with the joint venture partner and the financing bank of its Bulgarian joint venture associate, Galleria Plovdiv AD. The new financing agreement requires no additional capital contributions by the Company above those previously announced, and there are no material changes to the debt terms. The new agreement is expected to take the project to completion and opening, scheduled for the end of March, 2010. Enquiries: European Convergence Development Company plc +44 (0)1624 640200 Anderson Whamond
Michael Russell / Christopher Fitzwilliam Lay
Ian Dungate, Company Secretary
Hugh Morgan Stuart Gledhill
John Kiely Gemma Froggatt Website: www.europeanconvergencedevelopment.com This information is provided by RNS The company news service from the London Stock Exchange END
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| 08-02-10 | RNS |
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RNS Number : 8116G European Convergence Develop. CoPLC 08 February 2010 8 February 2010
EUROPEAN CONVERGENCE DEVELOPMENT COMPANY PLC ("ECDC" OR "THE COMPANY") Conclusion of lease agreement with Carrefour for Galleria Plovdiv retail mall European Convergence Development Company PLC ("ECDC" or the "Company") is pleased to announce that Galleria Plovdiv AD, the Company's joint venture associate company, has successfully concluded a lease agreement with Carrefour Bulgaria AD for slightly over 10,700 m2 in its retail mall development, Galleria Plovdiv ("the Mall"). The Mall has a Gross Leasable Area of 49,400 m2 and this new lease represents about 22% of the available space. Total leases signed or under offer now amount to approximately 75% of the total available area. Carrefour will effectively anchor the development with its hypermarket platform. The participation of such a proven global brand represents a significant achievement in the leasing strategy for the Mall and should have a significant beneficial impact on the Mall's footfall and therefore prospective tenant interest. All parties are working towards an opening date in late March 2010. Information on Carrefour: Carrefour is the largest chain of fast moving consumer goods in Europe and second largest in the world after the U.S. based Wal-Mart. Carrefour has over 15,000 company-operated and franchised stores in 35 countries, Gross sales of over 108 billion EUR and 490,000 employees. Enquiries: European Convergence Development Company plc +44 (0)1624 640200 Anderson Whamond
Michael Russell / Christopher Fitzwilliam Lay
Ian Dungate, Company Secretary
Hugh Morgan Stuart Gledhill
John Kiely Gemma Froggatt Website: www.europeanconvergencedevelopment.com This information is provided by RNS The company news service from the London Stock Exchange END
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