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AGP Asian Growth Properties

1.05
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Last Updated: 00:00:00
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Share Name Share Symbol Market Type Share ISIN Share Description
Asian Growth Properties LSE:AGP London Ordinary Share BMG054131021 COM SHS USD0.05 (DI)
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 1.05 0.10 2.00 0.00 00:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
0 0 N/A 0

Asian Growth Properties Limited City of London Acquisition (5423O)

07/11/2016 5:06pm

UK Regulatory


Asian Growth Properties (LSE:AGP)
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TIDMAGP

RNS Number : 5423O

Asian Growth Properties Limited

07 November 2016

7 November 2016

Asian Growth Properties Limited

("AGP" or the "Company")

Acquisition of an office building in the City of London

The Company is pleased to announce that on 7 November 2016, the Buyers (both of which are indirect wholly-owned subsidiaries of AGP) purchased from the Sellers the entire issued Units in the Trust that owns the Property known as 20 Moorgate, London, EC2R 6DA, pursuant to the terms of the S&P Agreement for a total consideration of approximately GBP154 million (approximately HK$1,491.0 million) (before the Buyers' transaction costs and expenses).

On Completion, the total consideration has been settled in the following manner:

1. the Buyers paid the Sellers approximately GBP75 million (approximately HK$726 million) in cash as consideration for the entire issued Units in the Trust (subject to post-completion adjustments); and

2. the Buyers also paid in cash, on behalf of the Sellers, approximately GBP79 million (approximately HK$765 million) to the bank's solicitors' account as repayment of the total Redemption Amount due by the Sellers to their bank.

The AGP Group funded the Acquisition from its existing cash resources and a new five year term loan facility of approximately GBP100 million (approximately HK$968.3 million) from HSBC. The bank loan is secured by a mortgage over the Property.

The Property is fully let to two tenants under long term lease agreements. The office accommodation is occupied by the Prudential Regulatory Authority (a regulatory body of the Bank of England) until 30 June 2027 and the sole retail unit is let to Fuller, Smith & Turner Plc until 24 December 2039. The valuation of the Property as at 14 October 2016 by an independent valuer was approximately GBP157 million (approximately HK$1,520.2 million). The net profit before taxation and after taxation of the Trust (including the change in fair value of investment property) for the year ended 31 December 2015 were both GBP6.0 million (approximately HK$58.1 million)). The Acquisition represents a net initial yield of 4.4%.

Further details of the Acquisition are set out below.

Background and reasons for the Acquisition

Since the Company's admission to AIM, the Company has been focused on developing its property portfolio in Hong Kong and mainland China, however there is no geographical restriction to its sphere of activities. It is the AGP Group's strategy to review and optimise its property portfolio from time to time with a view to achieving the greatest value for its Shareholders. Following the disposal of several projects earlier this year, the Company has been identifying potential acquisition targets in both local and major international markets. The Acquisition is an excellent opportunity for the Company to acquire a high quality commercial property at a prime location in the City of London with a stable rental income.

The Trustees (in their capacity as trustees of the Trust) are the sole legal owners of the Property. Immediately prior to Completion on 7 November 2016, the Sellers were the sole beneficial owners of the Property and the legal and beneficial owners of all the issued Units. Upon Completion, the Trustees (in their capacity as trustees of the Trust) continue to be the sole legal owners of the Property and the Buyers became the sole beneficial owners of the Property as well as the legal and beneficial owners of the entire issued Units.

The Property is a seven-storey office building developed in 2002 and located in the City of London, being less than 100 metres north of the Bank of England, with approximately 34 metres of prime frontage onto Moorgate. The Property provides approximately 154,854 square feet (approximately 14,386.3 square metres) of Grade A office, retail and ancillary accommodation arranged over lower ground, ground and seven upper floors. The valuation of the Property by an independent valuer as at 14 October 2016 was approximately GBP157 million (approximately HK$1,520.2 million).

The Property has a leasehold term of approximately 138 years unexpired with a current head rent of approximately GBP750,000 (approximately HK$7.3 million) per annum geared to 10% of rents received, subject to a minimum head rent of GBP500,000 (approximately HK$4.8 million) per annum. Under the terms of the Property's head lease, the Trustees are required to provide a bank guarantee in favour of the head landlord as security for the Trustees' obligations as tenant under the Property's head lease, including the Trustees' obligation to pay the head rent on behalf of the Trust. The Company's majority shareholder, S E A Holdings Limited, arranged such a bank guarantee of GBP3 million (approximately HK$29.0 million) from HSBC in favour of the head landlord.

The Property is fully let to two tenants under long term lease agreements. The office accommodation is occupied by the Prudential Regulatory Authority (a regulatory body of the Bank of England) until 30 June 2027. The sole retail unit is let to Fuller, Smith & Turner Plc until 24 December 2039. As a Guernsey trust, the Trust is not required to prepare audited financial statements. Based on the management accounts of the Trust, the rental income of the Property for the year ended 31 December 2015 was GBP6.8 million (approximately HK$65.8 million) (Year ended 31 December 2014: GBP7.4 million (approximately HK$71.7 million)), which included the effect of a rent free period. Based on current information, the AGP Group expects the Property to generate a rental income of GBP7.5 million (approximately HK$72.6 million) per annum.

The Board considers that the Acquisition would enable the AGP Group to achieve a reasonable return from rental income and provides an excellent opportunity for the AGP Group to expand its property portfolio by the addition of overseas properties with a view to maximizing its value for AGP's shareholders.

The consideration for the Acquisition was determined after arm's length negotiations between the AGP Group, the Sellers and the Trustees with reference to, among others, the location, expected rental income and potential for rental growth, market values of similar properties in the adjacent location and the carrying value of the Property.

Taking into account the prospects of the property market in London and the carrying value of the Property, the Directors consider that the terms of the S&P Agreement and the Acquisition are fair and reasonable and in the interest of the Company and the Shareholders taken as a whole.

The Directors have confirmed that, the existing tenants of the Property, the Sellers, the Trustees and their ultimate beneficial owners are independent of the Company and not a "related party" as defined in the AIM Rules.

Summary of the S&P Agreement

Under the S&P Agreement, the Sellers agreed to sell, free from all encumbrances, their respective Units to the Buyers for a consideration of approximately GBP154 million (approximately HK$1,491.0 million) which has been settled in the following manner:

1. the Buyers paid the Sellers approximately GBP75 million (approximately HK$726 million) in cash as consideration for the entire issued Units in the Trust (subject to post-completion adjustments); and

2. the Buyers also paid in cash, on behalf of the Sellers, approximately GBP79 million (approximately HK$765 million) to the bank's solicitors' account as repayment of the total Redemption Amount due by the Sellers to their bank.

Completion of the sale of the entire issued Units to the Buyers took place on 7 November 2016 immediately after the execution of the S&P Agreement, when the Buyers paid (i) the consideration for the Units to the Sellers and (ii) an amount equal to the Redemption Amount to the bank's solicitors' account.

Under the S&P Agreement, the consideration paid for the Units is subject to adjustments based on the NAV of the Trust. Within 20 Business Days after the Completion Date, the Sellers shall provide to the Buyers a pro-forma balance sheet containing, among others, the Actual NAV as at the Completion Date in relation to the Trust for their review. If the Actual NAV (as stated in the final completion accounts and agreed by the relevant parties) is:

(i) greater than the Estimated NAV, the Buyers shall pay to the Sellers an amount equal to the difference between the Actual NAV and the Estimated NAV; or

(ii) less than the Estimated NAV, the Sellers shall pay to the Buyers an amount equal to the difference between the Actual NAV and the Estimated NAV,

and the relevant party shall, within 10 Business Days after the date on which the final completion accounts and the Actual NAV are agreed, pay the difference between Estimated NAV and Actual NAV.

If the Actual NAV is equal to the Estimated NAV, no further payment is required by either party. Based on the information made available to the Buyers, the AGP Group does not expect the difference between the Estimated NAV and the Actual NAV to be material.

Information on the Buyers, the sellers and the trust

Tycoon Honour Limited, the First Buyer and Worthy Merit Limited, the Second Buyer, are investment holding companies and indirect wholly-owned subsidiaries of the Company.

PFM EuroSelect Elf GmbH & Co KG, the First Seller, is a limited partnership incorporated in Germany and before Completion held 109,950 Units (99.95% of the issued Units) while Lapis Grundstücksverwaltungs-GmbH, the Second Seller, is a private company with limited liability incorporated in Germany and before Completion held 50 Units (0.05% of the issued Units). The Sellers are managed by PFM Private Fund Management GmbH.

Moorgate I Limited, the First Trustee, and Moorgate II Limited, the Second Trustee, established the Trust in 2005 under the Trust Instrument. The Trustees, acting in their capacities as trustees of the Trust, are the sole legal owners of the approximately 138 years leasehold interest in the Property known as 20 Moorgate, London EC2R 6DA. Prior to Completion, the Sellers were the sole beneficial owners of the Property. The Buyers became the sole beneficial owners of the Property on Completion.

The carrying value of the assets of the Trust as at 14 October 2016 was approximately GBP157 million (approximately HK$1,520.2 million). As a Guernsey trust, the Trust is not required to prepare audited financial statements. Based on the management accounts of the Trust, the net profit before taxation and after taxation of the Trust (including the change in fair value of investment property) for the year ended 31 December 2015 were both GBP6.0 million (approximately HK$58.1 million) (Year ended 31 December 2014: GBP13.6 million (approximately HK$131.7 million). Upon Completion, the assets and liabilities of the Trust will be consolidated into the accounts of the AGP Group.

For the purpose of this announcement, an exchange rate of GBP1 = HK$9.683 is used.

This announcement contains inside information for the purpose of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

For more information, please contact:

   Lu Wing Chi                                                       Tel: +852 2828 6363 

Executive Director

Asian Growth Properties Limited

   Richard Gray                                                     Tel: +44 207 886 2500 

Andrew Potts

Panmure Gordon (UK) Limited

(Nominated Advisor)

The following definitions apply throughout this announcement unless the context requires otherwise:

 
 "Acquisition"              the acquisition of all the issued 
                             Units by the Buyers pursuant 
                             to the S&P Agreement and the 
                             payment of the Redemption Amount; 
-----------------------    ---------------------------------------- 
 "Actual NAV"               the NAV of the Trust as at 12:00 
                             p.m. (midday) London time on 
                             the Completion Date as determined 
                             after Completion in accordance 
                             with the S&P Agreement; 
-----------------------    ---------------------------------------- 
 "AGP" or the "Company"     Asian Growth Properties Limited, 
                             a company incorporated in the 
                             British Virgin Islands whose 
                             shares are traded on AIM market 
                             of The London Stock Exchange 
                             plc (Stock code: AGP); 
-----------------------    ---------------------------------------- 
 "AGP Group"                AGP and its subsidiaries; 
-----------------------    ---------------------------------------- 
 " AIM"                     AIM, a market operated by The 
                             London Stock Exchange plc; 
-----------------------    ---------------------------------------- 
 "AIM Rules"                the AIM Rules for Companies 
                             published by The London Stock 
                             Exchange plc; 
-----------------------    ---------------------------------------- 
 "Board"                    the board of Directors; 
-----------------------    ---------------------------------------- 
 "Business Day"             a day, other than Saturday, 
                             Sunday or a day on which banks 
                             are authorised to close in London, 
                             Frankfurt, the British Virgin 
                             Islands, Hong Kong or Guernsey 
                             for general banking business; 
-----------------------    ---------------------------------------- 
 "Buyers"                   the First Buyer and the Second 
                             Buyer 
-----------------------    ---------------------------------------- 
 "Completion"               completion of the sale and purchase 
                             of the Units pursuant to the 
                             S&P Agreement on 7 November 
                             2016; 
-----------------------    ---------------------------------------- 
 "Completion Date"          7 November 2016; 
-----------------------    ---------------------------------------- 
 "Director(s)"              the director(s) of the Company; 
-----------------------    ---------------------------------------- 
 "Estimated NAV"            approximately GBP154 million 
                             (approximately HK$1,491.0 million), 
                             as set out in the pro-forma 
                             balance sheet as at the Completion 
                             Date in relation to the Trust 
                             prepared in a form in accordance 
                             with the S&P Agreement; 
-----------------------    ---------------------------------------- 
 "First Buyer"              Tycoon Honour Limited, a company 
                             incorporated in the British 
                             Virgin Islands with limited 
                             liability and is an indirect 
                             wholly-owned subsidiary of AGP; 
-----------------------    ---------------------------------------- 
 "First Seller"             PFM EuroSelect Elf GmbH & Co 
                             KG, a limited partnership incorporated 
                             in Germany; 
-----------------------    ---------------------------------------- 
 "First Trustee"            Moorgate I Limited, a company 
                             incorporated in Guernsey and 
                             acts in its capacity as trustee 
                             of the Trust; 
-----------------------    ---------------------------------------- 
 "HK$"                      the lawful currency of Hong 
                             Kong for the time being; 
-----------------------    ---------------------------------------- 
 "Hong Kong"                the Hong Kong Special Administrative 
                             Region of the People's Republic 
                             of China; 
-----------------------    ---------------------------------------- 
 "HSBC"                     The Hongkong and Shanghai Banking 
                             Corporation Limited; 
-----------------------    ---------------------------------------- 
 "NAV"                      the aggregate amount of the 
                             fixed and current assets of 
                             the Trust less the aggregate 
                             amount of the liabilities of 
                             the Trust as at the Completion 
                             Date, as set out in the completion 
                             accounts prepared in accordance 
                             with the S&P Agreement; 
-----------------------    ---------------------------------------- 
 "Property"                 the approximately 138 years 
                             leasehold interest in the property 
                             known as 20 Moorgate, London 
                             EC2R 6DA, the title to which 
                             is registered at the land registry 
                             with title number NGL 779978; 
-----------------------    ---------------------------------------- 
 "Redemption Amount"        approximately GBP79 million 
                             (approximately HK$765 million) 
                             being the aggregate amount of 
                             the bank loan and interest rate 
                             swap redemption amount owed 
                             by the Sellers to their bank; 
-----------------------    ---------------------------------------- 
 "Second Buyer"             Worthy Merit Limited, a company 
                             incorporated in the British 
                             Virgin Islands with limited 
                             liability and is an indirect 
                             wholly-owned subsidiary of AGP; 
-----------------------    ---------------------------------------- 
 "Second Seller"            Lapis Grundstücksverwaltungs-GmbH, 
                             a private company with limited 
                             liability incorporated in Germany; 
-----------------------    ---------------------------------------- 
 "Second Trustee"           Moorgate II Limited, a company 
                             incorporated in Guernsey and 
                             acts in its capacity as trustee 
                             of the Trust; 
-----------------------    ---------------------------------------- 
 "Sellers"                  the First Seller and the Second 
                             Seller; 
-----------------------    ---------------------------------------- 
 "S&P Agreement"            the agreement relating to the 
                             Acquisition entered into between 
                             the Buyers, the Sellers and 
                             the Trustees on 7 November 2016; 
-----------------------    ---------------------------------------- 
 "Trust"                    the Moorgate Unit Trust, a unit 
                             trust established in Guernsey 
                             and constituted pursuant to 
                             the Trust Instrument; 
-----------------------    ---------------------------------------- 
 "Trustees"                 the First Trustee and the Second 
                             Trustee; 
-----------------------    ---------------------------------------- 
 "Trust Instrument"         the trust instrument dated 15 
                             September 2005 (as amended on 
                             24 August 2016) relating to 
                             the Trust; 
-----------------------    ---------------------------------------- 
 "Units"                    the units of the Trust; 
-----------------------    ---------------------------------------- 
 "GBP"                      Pounds sterling, the lawful 
                             currency of the United Kingdom; 
                             and 
-----------------------    ---------------------------------------- 
 "%"                        per cent. 
-----------------------    ---------------------------------------- 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

ACQDDLFBQFFBFBF

(END) Dow Jones Newswires

November 07, 2016 12:06 ET (17:06 GMT)

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