Net Asset Value(s)
Fabian Romania Limited
28 April 2008
28 April 2008
Fabian Romania Limited (FAB.LN)
Net asset value as at 31 March 2008
Highlights
• Fabian Romania Limited (the "Company"), is an AIM listed, experienced and
leading investor in the Bucharest and wider Romanian real estate market.
• The Company seeks to generate attractive total returns for its
shareholders through a portfolio of income producing buildings,
co-development residential, office, logistics and retail projects, with
experienced partners and land investments. Fabian receives investment advice
from Fabian Capital Limited, an independent investment management firm that
specialises in Romanian real estate investment advice (Fabian Capital
Limited does not carry out any regulated activities in the UK).
• As at 31 March 2008, the Net Asset Value ("NAV") per share of the Company
as determined in accordance with its Articles of Association was €1.703 (31
December 2007: €1.700) an increase of 0.2 per cent. over the fourth quarter
of 2007 and 22.5 per cent. for the comparative full year (31 March 2007:
€1.390).
• Adjusting the current NAV for the estimated future development profits of
€0.522 per share indicates a potential future NAV ("Development Profit NAV"
or "DPNAV") of €2.225 per share (31 December 2007: €2.214) an increase of
0.5 per cent. over the fourth quarter of 2007.
• As at 31 March 2007, the company has now invested or committed €37.5
million, or 98 per cent. of the €38.1 million in net proceeds raised at the
time of AIM listing in December 2006.
• Timisoara, the 50 per cent. joint venture residential project, acquired in
the second quarter of 2007 to develop 350 apartments with local developer
Coltex, has now attained upgraded planning consent for 38,524 square metres,
an increase of 3,524 square metres from the expected 35,000 square metres at
acquisition. The building permit application is expected to be submitted to
the authorities in the current quarter with construction commencing during
this year.
• On 7 March 2008, the Company completed the acquisition of the Romana
office development project. The Romana office building plot is located in
the centre of Bucharest on Dacia Boulevard close to Romana Square. The
building will be built to Class A specifications with a gross area of
approximately 3,000 square metres while the net lettable office area will be
circa 2,480 square metres over 7 floors, together with 40 car parking
spaces. Construction is due to commence in second quarter of this year with
practical completion anticipated in the second quarter of 2010.
• The office rental market is continuing to develop strongly. Approximately
90 per cent. of Lakeview, the office joint venture development with AIG/
Lincoln has now been either pre-let or is at advanced stages of negotiation.
Finalisation of the main construction contract is underway with construction
expected to commence next quarter. Pre-construction works have been
underway since the fourth quarter of 2007.
• The New Town residential scheme continues to experience forward sales of
its residential units. Sales commenced in July 2007 and to date 270
apartments have now been reserved off plan comprising 85 per cent. of the
three sales releases totalling 316 apartments.
• The construction works for Cubic Centre office building are ahead of
schedule with anticipated practical completion in the first quarter of 2009.
To the shareholders of Fabian Romania Limited
Fabian Romania Limited, is pleased to announce that its NAV as at 31 March 2008
is €1.703 per share. This represents a rise of 0.2 per cent. from the preceding
fourth quarter NAV of €1.700 per share. Year on year, the NAV of the company has
risen 22.5 per cent. from €1.390 per share as at 31 March 2007.
The published NAV was calculated according to the Company's Articles of
Association and the results are summarised below:
As at 31 March 2008 Fabians' share Bank (debt) Net Worth Net Equity
of Market Value invested **
€m €m €m €m
Cascades 18.5 (9.2) 9.3 2.6
Banu 17.7 (8.8) 8.9 3.4
New Town * (^) 23.9 (9.4) 14.5 5.8
Lakeview *(^) 11.9 (5.6) 6.3 5.3
Cubic Centre 12.5 0.0 12.5 12.5
Baneasa Business Centre 29.0 (19.4) 9.6 4.2
Timisoara * (^) 4.8 (2.6) 2.2 1.6
Evo 6.1 (3.7) 2.4 1.5
Romana 3.0 (0.8) 2.2 1.3
Net cash 15.8
Other assets / (liabilities) 2.7
Sub-total 127.4 (59.4) 86.5 38.2
Shares (#)
50,831,130
NAVPS (€) 1.703
Growth in Q1 2008 0.2%
* represents Fabian Romania Limited's share of the development
(^) includes development WIP financed by both equity and bank debt
** Net equity invested comprises the original acquisition equity less
amounts repaid through refinancing
Future Development Profit of €0.522 per share
Under the Red Book methodology of the Royal Institution of Chartered Surveyors,
residual land valuations for development projects provided to Companies such as
Fabian Romania Limited exclude the net present value of future development
profits. The Directors believe this approach, whilst logical for valuing land
plots between buyers and sellers, is not ideal for shareholders in quoted
property companies where development is a key component of the company's
activities. In order to provide transparency to our shareholders as to the
potential level of such future development profits that may accrue to the
Company, DTZ Echinox ("DTZ") is asked to provide estimates of these development
profits. These estimates by their very nature are forecasts relying on future
events and accordingly are subject to uncertainty. Shareholders may then choose
to discount these profits to estimate their net present value in today's terms
based on current market conditions.
The forecast development profit figures are stated gross and do not include all
costs that may be incurred by Fabian over the course of the projects (in
particular transaction fees and any carried interest payable to the investment
manager). The implied share of future development profit figures for the New
Town and Timisoara residential schemes and the Lakeview, Cubic Centre and Romana
Office schemes, based on the Company's calculations using DTZ's estimates, is
highlighted in the table below:
Project Implied Fabian Share of future Development Profit Final Year of
(€m) Development *
Cubic Centre 4.4 2009
New Town 8.1 2009
Lakeview 8.9 2009
Romana 0.4 2010
Timisoara 4.8 2010
NAV contribution (€m) 26.6
NAVPS contribution (€) 0.522
* Fabian Romania Limited estimates
Adding these forecast development profits of €26.6 million or €0.522 per share
to the NAV produces what the Directors have called the DPNAV of €2.225 per
share. This represents a rise of 0.5 per cent. over the 31 December 2007 DPNAV
of €2.214.
Portfolio Mix
As at 31 March 2008, the portfolio of the Company comprised the following type
of investments as a percentage of the net asset value of the Company.
Portfolio mix
(as at 31 March 2008) Net worth
Income 35%
Development 44%
Cash and other 21%
100%
AIM proceeds 98 per cent. invested or committed
As at 31 March 2008, the company has now invested or committed €37.5 million, or
98 per cent. of the €38.1 million in net proceeds raised at the time of its AIM
listing in December 2006. The following sums have been either invested or
committed for investment during the first quarter. This is in line with the
Company's prudent policy of always ensuring it has the equity available to build
out a development project when an acquisition is made.
€ million
Cash balance, at 31 December 2007 23.90
Funds retained in existing joint venture development companies (2.06)
Lakeview, equity reinvestment prior to construction (2.34)
Romana, future equity requirement (1.88)
New Town, potential future funding requirement (2.75)
Timisoara, future equity requirement (6.06)
New acquisitions currently undergoing due diligence, future equity requirement (4.18)
Jersey level contingency(4.00) (4.00)
Total free cash available for investment 0.63
Total net funds raised at IPO in December 2006 38.10
Total invested since December 2006 98%
Percentage of amounts still to be invested 2%
Timisoara new planning achieved
The new planning application ("PUZ") lodged with the city planning authorities
in the fourth quarter of 2007 for the Timisoara land plot was approved in the
first quarter of 2008. This grants permission for 38,524 square metres of
residential space over ground on a plot of 13,245 square metres. This represents
an increase of 3,524 square metres over the previous planning permission
obtained.
It is expected that the building permit application will be submitted to the
local authorities in the second quarter of 2008. Construction work is planned to
commence on site in the fourth quarter of this year. A firm of UK architects is
working together with local architects to develop the concept design. To date,
the investment manager has been extremely impressed with the quality of the
design ideas produced by the architects engaged.
The total purchase price for all the plots purchased between June and October
2007 amounted to €6.54 million representing a price of €494 per square metres of
land or €187 per square metre built above ground. Timisoara is one of the
richest cities in Romania, close to the Hungarian boarder with a strong local
economy and low unemployment. The city is the centre for many international
companies entering Romania preferring a base in the west of the country towards
Hungary and the rest of the European Union.
The land value for the company's 50 per cent. share in the Timisoara scheme
given by DTZ at 31 March 2008 was €4.05 million, up 9 per cent. from the 31
December 2007 valuation of €3.7 million or 24 per cent since acquisition. Adding
work in progress of €0.75 million, the total value of the Company's investment
stands at €4.8 million. This has been financed by €1.6 million of equity, and a
proportionate share of bank debt drawn down from Banca Romanesca of €2.6
million, resulting in a small gain to date of €0.6 million on the Company's net
invested equity. The Company currently forecasts project completion to be
achieved by the end of 2010.
Romana acquisition
On 7 March 2008, the Company completed the acquisition of the Romana office
project. The Romana office building will be built for Fabian on a centrally
located site on Dacia Boulevard. The building will be built to Class A
specifications with a gross area of approximately 3,000 square metres. The
project management will be undertaken by Globus, an experienced local developer
in Romania. Construction is due to commence in the second quarter of 2008 with
completion anticipated in the second quarter of 2010. Upon completion, the
building will provide a net lettable office area of around 2,480 square metres
over 7 floors, together with 40 car parking spaces. The building is in a
prominent position with views over Romana Square and is likely to attract
international tenants seeking Class A office space. The Company will pay a total
purchase price of €9 million of which €1.3 million has already been paid.
Financing for the project has credit approval by the Bank of Cyprus. Upon debt
draw down, the Company's equity requirement is expected to be €1.9 million with
debt finance to fund the balance.
The acquisition gives the company further exposure to both a city centre
location and the office rental market. On base case rents of €22 per square
metre per month, the implied acquisition yield amounts to 9.4 per cent., up from
the 8.9 per cent. assumed when the acquisition was first signed in February last
year. The continued strength of the Bucharest office market should underpin our
current rental assumptions, with achieved rents in the area currently exceeding
€22 per square metre per month.
Lakeview building now 90 per cent. pre-let or subject to heads of terms
At the time of writing, 67 per cent. of the building is pre-let to two tenants
with a further 23 per cent. subject to heads of terms with a further tenant, all
of whom are substantial multi-national corporations. The rentals achieved are in
line or just above the investment manager's expectations for a pre-let building
in this location.
Since September 2007, when final building consent was granted for the
construction, extensive work has been undertaken by our development partner, AIG
/Lincoln, to prepare the site for the start of construction by next quarter. The
negotiation of the construction agreement is in its final stages following a
tendering process with local and international contractors.
In line with the Company's policy, valuations take place at the half and full
year stages, unless material changes have taken place during the quarter. The
valuation of the Lakeview site therefore remains unchanged from the 31 December
2007 valuation of €8.8 million against the purchase price of €5.3 million
equating to a 66 per cent. return on equity. Adding work in progress of €3.1
million to this valuation, the value of the company's investment stands at €11.9
million. The development has been financed by €5.3 million of equity and bank
debt drawn down from a facility with MKB Bank of €5.6 million.
The forecast gross development value of the scheme, according to DTZ, as at 31
March 2008, also remains unchanged from the 31 December 2007 valuation of €71.8
million. This is based on a core yield of 6.8 per cent. and forecast office
rents of €15 per square metre per month. After deducting forecast development
costs, DTZ's forecast implies future development profits for the company
amounting to €8.9 million or some €0.18 per share. The Company currently
forecasts project completion to be achieved by the end of 2009.
Sales update at New Town
New Town is a scheme of 72,000 square metres above ground involving the
construction of 636 apartments targeted at Bucharest's emerging middle class.
The scheme was granted final building consent at the start of April 2007. The
joint venture development company, Phoenix Park SRL, in which the company has a
50 per cent. stake has agreed a fixed price build contract with Mivan Kier.
A full sales launch for New Town commenced in mid July 2007 with the first of
six sales releases comprising 119 apartments. Two further releases have been
made since then. The Directors are pleased to announce that as of the time of
writing, 270 apartments in the New Town residential scheme have now been sold.
All apartments in the first release, 117 out of 122 in the second release and 34
out of 75 in the third release have been sold. The first release had an average
selling price of €1,299 per square metre, the second release had an average
selling price of €1,437 per square metre and the third release is currently
selling at an average price of €1,586 per square metre (excluding VAT).
The 31 December 2007 site valuation, by DTZ, of €15.6 million for the company's
50 per cent. share in New Town remains unchanged. Adding work in progress of
€13.0 million to this valuation, but subtracting advances from customers of €4.7
million, the value of the company's investment stands at €23.9 million. This has
been financed by €5.8 million of equity and bank debt drawn down from HVB of
€9.4 million. The resultant gain of €8.7 million equates to a 150 per cent.
return on the company's invested equity. The Company currently forecasts project
completion to be achieved by the end of 2009.
Income producing buildings: Cascades, Banu Antonache, Baneasa Business Centre
and Evo Centre
The Banu Antonache investment has remained constant at €17.7 million in line
with the DTZ valuation at 31 December 2007. On the invested equity of €3.4
million, the return on the company's equity has grown to 162 per cent. since
acquisition in December 2005.
DTZ has valued Cascades at €18.51 million compared to the 31 December 2007
valuation of €18.5 million. On the original equity investment in April 2006 of
€2.6 million, post debt drawdown, the return on the company's equity invested in
Cascades since acquisition has now grown to 258 per cent..
Baneasa Business Centre has been valued by DTZ as of 31 March 2008 at €29.5
million, unchanged from the valuation as at 31 December 2007. The directors
have included the building at a valuation of €29.0 million to reflect a more
cautious approach in the current environment towards buildings that are not
recently built, given Baneasa was built in 2001.
Since the acquisition of the Baneasa Business Centre on 29 June 2007, the
investment manager has been able to renegotiate existing leases as they came up
for renewal and increased the average remaining unexpired lease length to 3.7
years from 1.7 years. Further asset management initiatives are being considered
and the investment manager is confident the building will continue to grow in
value. Net equity invested by the Company is approximately €4.2 million pre
revaluation. With a gain of €5.4 million since acquisition, the Company has
achieved a pro forma return on equity invested of 129 per cent. to date.
The Evo Centre, comprising 3,213 square metres of lettable space, was valued at
€6.1 million by DTZ on 31 March 2008 representing an uplift of €0.03 million or
0.05 per cent. from the previous valuation of €6.07 on 31 December 2007. The
building was acquired from its developers, the Adama Group of Israel on 22
November 2007 for a purchase price of €5.2 million. In December 2007, the
Company drew down €3.7 million from Investkredit Bank AG resulting in net equity
post drawdown of €1.5 million. Since acquisition, the Company has made a gain of
60 per cent. on the initial equity invested.
Cubic Centre on budget but ahead of time schedule
The construction of the Cubic Centre office building is expected to be completed
in the first quarter of 2009, a quarter earlier than the original plans. Fabian
has paid an initial instalment of €12.5 million towards the anticipated purchase
price which is expected to be the total equity requirement for the company. At
the practical completion of the building, Fabian will pay the final instalment
based upon a forward purchase yield of 7.4 per cent. to 7.8 per cent. applied to
the rents achieved by the developer.
DTZ estimated the future value of the Cubic Centre at €64.8 million based on a
yield of 7.15 per cent. as at 31 December 2007. After deducting the balance of
the purchase price still to be paid by the company, the future developer's
profit is estimated at €4.4 million to the Company or €0.09 per share.
The Economy
The Romanian economy continues to power ahead. GDP growth for 2007 came out at 6
per cent. on top of 7.9 per cent. growth in 2006 and 4.1 per cent. in 2005. The
economy has now been continuously expanding at above 4 per cent. per annum since
the end of 2000. This represents a remarkable turnaround from the performance in
the 1990s when two deep recessions took place in the space of ten years. Such
strong GDP growth combined with an addressable market which, in population
terms, is the size of the Czech Republic and Hungary combined is driving
businesses' expansion plans. This is directly reflected in the demand the
Company, as a landlord, is seeing for office space. As an example, one of the
Company's prospective tenants is factoring in a 45 per cent. increase in their
office space requirements over the next five years.
On the back of strong GDP growth, high employment and a benign tax environment,
real wages grew by a staggering 21 per cent. in 2007. This comes on the back of
a 26 per cent. growth in 2006. This surge in real disposable incomes is having a
marked impact on the consumer. Retail sales are strong which are in turn driving
retailers' demand for new retail space. In residential, the impact is
particularly marked with strong house price inflation to the benefit of
developers.
The flip side of such strong GDP growth and rise in net wages has been a
consumption boom. Along with the appreciation of the Lei against the Euro since
2005, this has contributed to a ballooning trade deficit contributing in turn to
consensus forecasts for a 14 per cent. current account deficit in 2008. Only
half of the deficit is expected to be covered by foreign direct investment, with
the balance from portfolio inflows. As a response the Central Bank has increased
interest rates to slow both the growth of credit and the overall economy. The
currency has also depreciated against the Euro from the level of 3.11 against
the Euro in May 2007 to 3.56 at the time of writing. Year to date, export growth
has now recovered to grow at a faster rate than the growth of imports but it is
too early to definitely predict the emergence of a positive trend. The absolute
level of the current account deficit remains a concern.
The Credit Crunch Impact
The sub-prime lending crisis in the US has now started to have an impact on
Romania. This is not because any of the fifteen or so of the mainly Austrian,
Greek, Italian or German owned banks conducting property lending in the country
have been particularly hit by exposure to sub prime mortgages per se, but
because of the European wide reduction in money market liquidity and the
associated rise in Euro denominated interest rates. Banks have sought to pass on
their increased costs of funding to borrowers. Financing is therefore still
available but at higher costs and with reduced loan to value ("LTV") ratios.
According to Jones Lang LaSalle ("JLL"), investment loan margins have increased
on average by 40-65 bps and LTV ratios have declined to 65-75 per cent. from
70-80 per cent. since the last half of 2007. Amortisation rates and debt service
coverage ratios have remained unchanged. Owing to the investment manager's
relationship with a number of financial institutions, we believe securing
financing for the company will not prove to be too onerous if the current market
conditions persist but it will be at the expense of higher interest rate margins
than was the case last summer.
In terms of an impact on demand in the country's property market, we have
noticed some caution from end buyers of residential apartments after a number of
negative articles in the Romanian media concerning the credit crunch. There has
also been some impact from the increase in Euro denominated mortgage rates,
though given the current very low level of mortgage borrowing in the country,
this effect should not be overstated.
For the office market, office leasing activity remains high and unchanged from
last summer. Vacancy rates remain sub 3 per cent. according to DTZ. In the
absence of substantial new supply, office rents jumped 20 per cent. in 2007
according to JLL. Corporates continue to seek new office space for expansion
and there has been no noticeable change to occupiers demand for pre-lets of
office space. In terms of investment purchases of office buildings, very few
transactions have taken place since GTC's sale of America House to Ixis at a 5.6
per cent. yield last August, albeit based on below market rents of €19.0 per
square metre per month. However, headline yields are suspected to have increased
to around 6 per cent. or just above. However, at this stage there have not been
any major transactions in the market to support this view.
The Company has always been conservative in its approach to both financing and
development risk and this is now paying dividends in the current more
straightened financial environment. For instance, finance liquidity risk has
always been prudently managed by spreading the credit risk to not only different
financial institutions but with different and interpolating lengths of credits.
The existing loan portfolio incorporates a mix of fixed and floating loans,
which is being actively managed to limit an adverse impact on the Company from a
sudden deterioration in European interest rates. On the letting side, the
Company has always worked to secure pre-lets with strong tenants at an early
stage for all development projects. Construction procurement and costs are
secured by not relying on a single construction counterparty and by locking in
fixed construction contracts once building consent is achieved. By spreading
investments into different sub sectors of the country's property market, between
development projects and fully let investment properties and between Bucharest
and the regions, the investment manager has continued to ensure that no
unnecessary concentration exists in the spread of the Company's investment
portfolio.
The Property Market
Some concern has been expressed by some market participants as to the forecast
level of supply in the office market over the next couple of years. A number of
Bucharest based property agencies have forecast for 2007 - 2010 inclusive some
300,000 square metres of new Class A office stock to be supplied into the market
in each year. Under such a scenario, and given the city's current total class A
stock of just over 900,000 square metres, there is a risk that vacancy levels
may increase from the current sub 3 per cent. level to an estimated 5 per cent.
level in the coming 12-18 months as noted by JLL.
However, the anticipated new space that was expected to have been delivered onto
the market has for a number of years been consistently overestimated. In 2007,
for instance, 300,000 square metres was forecast by a number of property agents
to be delivered during the course of the year. However, half of this volume was
actually delivered by the year end according to a number of the same agents.
This highlights a long term tendency to over optimism upon the part of local
agents in respect of how much space developers are physically able to construct
in a given year.
This bias to over optimism is exacerbated by the nature of the Romanian office
market. Many developments are announced at an early stage to attract interest
from tenants and other interested parties. Delays often occur due to lack of
construction capacity, land title issues, difficulties over financing and
planning, particularly for the less experienced local developers. The
investment manager believes that between 140,000 square metres and 170,000
square metres of new office space will be delivered onto the market during 2008,
against current forecasts by a number of agents of over 300,000 square metres.
The investment manager believes that the market will remain undersupplied with
office space for the coming 3-5 years as both international and local investors
are becoming more cautious or scaling back their plans in the current financial
climate. With continued expansion by existing multinationals and new foreign
direct investment, the gap between supply and demand to the benefit of the
landlord developer will be maintained. In the medium term, the investment
manager believes that Bucharest can sustain two million square metres of Class A
office space in line with the current stock of Budapest, the capital city of a
country with less than half the population of Romania. Even at two million
square metres, it will put Bucharest only at 25 per cent. of the level of
Athens, where Class A stock stands at eight million square metres.
The investment manager's view regarding rent is supported by a report produced
by JLL confirming that market-leading rental rates achievable in Central-North
Bucharest remain at levels between €22-24 per square metre per month, up some 20
per cent. during 2007, whereas prime pre-leases of €17-19 per square metres are
achievable.
Construction costs are forecast by Bucharest based cost consultants to increase
in 2008, a trend seen throughout Eastern Europe. This will have some impact for
developers on returns for new projects especially in weaker locations or where
the land is over-priced. Set against this, increases in construction costs are
anticipated to be more than off-set by continuing growth in rental and sales
values. The investment manager continues to be prudent in selecting projects for
consideration by the Company's directors and aim to mitigate construction cost
risks as far as possible by signing fix priced contracts and by keeping current
construction companies accountable for contracts signed.
Strategy
The investment manager will continue to assess whether each of the company's
assets continues to meet internal rate of return targets on a forward basis. If
individual assets are forecast to fail to meet required hurdles, they will be
put up for sale. Any sale proceeds will be recycled for reinvestment in new
projects, assuming such acquisitions will deliver suitably attractive returns.
As previously reported last quarter, some property investors, whose investment
strategy involves high levels of gearing, have stepped back from transactions at
the more speculative end of the office investment market. In addition, some
overseas developers seeking to enter Romania or add to existing land holdings
have either decided not to enter the market or to become more cautious in the
size of schemes they are seeking to develop. The investment manager believes
this may be somewhat beneficial to the Company. As Romania continues to develop,
it is not in the Company's interest for the property market to move from boom to
bust but rather to exhibit a steadier rate of growth. If some of the more
ambitious plans, from last summer, by foreign developers have been scaled back
or cancelled, this is much to the benefit of the existing players in the
Romanian property market such as Fabian.
A number of attractive opportunities have been presented to the directors, some
of which are at an advanced stage of negotiations. The Company will continue its
successful development strategy acting together with local and international
development partners. The Timisoara deal represented the first deal for the
Company outside Bucharest and has marked the start of a greater focus going
forward for the Company both on the residential sub-sector and the regional
cities. A number of potential transactions are currently being evaluated in
regional cities including both prospective residential and logistics development
schemes.
Investors and developers with less strong relationships with banks are finding
it more difficult to attain competitive financing or financing at all. In some
cases, this is likely to ensure an increased supply of relatively inexpensive
buildings where the owners are having financing difficulties. Fabian will seek
to take advantage of such opportunities as they arise, particularly in light of
the on-going strength of the office rental market and the investment manager's
experience in this sub-sector.
To date, the Company has not purchased any assets in the retail or logistics
markets. Retail developers have been aggressive in expansion plans to the extent
that a number of regional cities now have up to four shopping centre schemes on
the drawing board all due to compete with each other. For fully let centres, the
current shortage has meant high rents which the investment manager believes will
fall as new supply of retail space comes onto the market. The retail market is
the least preferred sector in the investment manager's view.
The Company has not, as yet, acquired any co-investment development projects in
the logistics sub-sector but is actively looking to do so. The amount of
logistics space developed to date in Romania is substantially insufficient for
the economy's current needs. A number of potential site acquisitions with
prospective high quality development partners are being assessed to give
exposure to the logistics sub-sector with attractive forecast returns.
Outlook and Share Price
The Company's current co-investment development projects, with strong
development partners, continue to make excellent progress and to set standards
in the country in their respective sub-sectors of the property market. 2008 is
set to see construction start on the Lakeview, Romana and Timisoara schemes and
near completion on the Cubic Centre and New Town. This will mark a significant
step towards the realisation of a substantial part of DTZ's forecast DPNAV of
€2.225 per share. The share price performance since the AIM IPO of Fabian
Romania Limited has been disappointing. It is of little consolation that the
share price might have outperformed its peer group on AIM over the course of the
credit crunch or that in Sterling terms the decline has been much less. The
delivery of realised profits from development projects, forecast in 2009, will
drive the NAV per share, which the investment manager hopes will be reflected in
the Company's share price.
In the meantime, the investment manager continues to actively market the
Company's shares to institutional investors both in the UK, on the continent and
amongst new emerging market institutions in the Baltic States and Sweden. To
this end, we are working closely with both our existing broker, Shore Capital,
as well as the Company's new joint broker, KBC Peel Hunt, appointed for this
very purpose. A number of property investor conferences have been attended and
further attendances are planned.
The Company's portfolio of office buildings is set to continue to benefit from
the strength of the office leasing market. A number of attractive acquisition
opportunities are currently under consideration. The investment manager regards
the outlook for the Company, the Romanian property market and Romania in general
as continuing to offer attractive opportunities for 2008 and beyond.
Mark Holdsworth & Jan-Olof Hansson
Fabian Capital Limited
28 April 2008
The directors of Fabian Romania Limited accept responsibility for the
information contained in this announcement. To the best of the knowledge and
belief of the directors of the Company (who have taken all reasonable care to
ensure that such is the case) the information contained in this announcement is
in accordance with the facts and does not omit anything likely to affect the
import of such information.
Contacts:
Fabian Capital Limited
Mark Holdsworth Tel: +44 20 7499 9988
Deloitte Corporate Finance - Nominated Adviser to Fabian
James Lewis Tel: +44 20 7936 3000
KBC Peel Hunt - Joint Broker to Fabian
Capel Irwin Tel: +44 20 7418 8900
Shore Capital Stockbrokers Limited - Joint Broker to Fabian
Dru Danford Tel: +44 20 7408 4090
This information is provided by RNS
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