Interim Management Statement

 

TIDMDPE 
 
RNS Number : 2377M 
DP Property Europe Limited 
19 May 2010 
 

DP PROPERTY EUROPE LIMITED 
INTERIM MANAGEMENT STATEMENT 
For the period 1 January 2010 to 19 May 2010 
Investment objective 
DP Property Europe Limited (formerly Rutley European Property Limited) ("the 
Company") and its subsidiaries ("the Group") constitute a core-plus commercial 
real estate fund which was established in 2005 with a primary geographical focus 
on Central and Western Europe and an objective of generating for Shareholders a 
geared net IRR of not less than 12% per annum on the issue price of its share 
capital from both capital growth and dividend income. 
In March this year, an EGM was held to agree to various changes in the Company's 
Articles of Association including change of name, investment parameters, gearing 
levels and its status as an evergreen property investment company.  Following 
these changes the stated objective of an IRR return of not less than 12% is no 
longer relevant; however, it remains the objective of the company to maximise 
growth and value for shareholders. The company's investment policy has also been 
amended to reflect the change in status from a finite life investment vehicle to 
an evergreen company by the removal of the requirement to cease investment 
activity after 1 January 2010 and return capital to shareholders. For details of 
the changes made at the EGM the Directors would like to draw your attention to a 
Company circular dated 18 February 2010 which is available on the Company's 
website. 
 
Company Description 
Rutley European Property Limited was incorporated on 17 November 2005 as a 
closed ended, Guernsey registered investment company, with an independent Board 
of Directors. 
Portfolio profile and valuation 
The Group's portfolio comprises 55 properties across continental Europe with a 
value of GBP485.3 million (EUR539.3 million) as at 31 December 2009. The December 
2009 valuations showed a decrease in the value of the Company's property 
portfolio, in Euro terms, of approximately 7.2% over the year. The value of the 
Company's property portfolio, in Euro terms, increased by 0.31% on a like for 
like basis over the last six months of the year (EUR537.6 million as at 30 June 
2009). The Sterling value of the property portfolio as at 31 December 2009 
increased by 6.15% to GBP485.3 million over the same period (GBP457.2 million as 
at 30 June 2009, on a like for like basis, excluding the Osnabruck 64 asset 
which was disposed of during the year) as a result of the strengthening of the 
Euro against Sterling. 
Portfolio activity 
The Company's portfolio continues to benefit from its defensive characteristics. 
The portfolio is diversified by geography and through a broad tenant base of 
approximately 650 tenants. As at 31 December 2009, the ten largest tenants 
represented 33.14% of portfolio income, consisting of public sector occupiers, 
German food retailers and large global corporations. 
Asset management activity has underpinned rental income, vacancy and weighted 
average unexpired lease terms throughout 2009, in challenging occupier markets. 
During the period, the portfolio has continued to perform to expectations and 
asset management activity has strengthened the portfolio income profile. During 
the period, in excess of 17 lease transactions were completed in respect of 
28,000 sq. m., representing approximately 7.4% of the portfolio by area. Notable 
transactions were in: 
* Sweden - two large leases renegotiated on six year terms to public sector 
occupiers, totalling in excess of 16,400 sq. m. and achieving an uplift in 
rental income; 
* Netherlands - the single commercial lease to the Dutch Government was renewed 
at Jan Van Nassaustraat, The Hague, extending to 3,100 sq. m. In addition, two 
new leases were agreed at the Amsterdam asset, totaling in excess of 1,900 sq. 
m. 
* Germany - lease renegotiations with four tenants in the Nuremberg portfolio, 
totaling approximately 4,000 sq. m., improving the weighted unexpired lease 
terms of the assets and securing income over the medium term. In addition, two 
lettings at Mosse Zentrum, Berlin, totaling 785 sq. m. have further reduced 
vacancy and enhanced income. 
* Poland - four leases renegotiated at Prima Court, Warsaw, totaling 
approximately 1,800 sq. m. securing income for an additional 3 - 5 years and 
improving the weighted unexpired lease term. 
 
Material events and transactions 
During the period, an EGM was held to agree the following changes to the 
Company's Articles of Association: 
(i)         Updating of the Company's investment policy, including a change to 
permit additional investments after 31 December 2009 
(ii)        to increase the gearing limit to 95% of the Company's gross assets 
on a consolidated basis 
(iii)       removing the limit of authorised share capital of the company in 
relation to no par value shares of the company 
(iv)       changing the Company's name 
(v)        extending the life of the Company beyond 31 December 2013 
(vi)       Redesignating the Preference Shares and the C Shares of the Company 
as Ordinary Shares (none of the C shares have been issued by the Company at 
present) 
(vii)      Cancelling the Redeemable Preference Carried Interest Shares 
(viii)      Replacing the existing objects clause in the Memorandum of 
Incorporation of the Company with a new unrestricted objects clause, and, 
(ix)       Adopting new Articles of Incorporation of the Company in order, inter 
alia, to take account of the foregoing proposals and recent Guernsey company law 
developments. 
On 14 May 2010, the Board announced it will be convening an EGM, pursuant to a 
request by the majority shareholder, to put resolutions to the shareholders 
including, inter alia, the removal of the independent directors and cancellation 
of the Company's listings. Further details can be found in the announcement of 
14 May 2010, which is on the Company's website. A circular will follow in due 
course. 
 
Net Asset Value (NAV) and Share price movements 
The NAV as at 31 December 2009 was as follows: 
NAV per Redeemable Preference Share: GBP0.264 
Adjusted NAV excluding deferred tax assets and liabilities: 
NAV per Redeemable Preference Share: GBP0.267 
As at 19 May 2010, the share price was 5.00p per share.  This represents a 
81.06% discount to the NAV (26.4p) and an 81.27% to the adjusted NAV (26.7p) 
after taking into account deferred tax assets and liabilities. 
Dividends and Financing 
No dividend has been declared in the period. 
In light of current market conditions, the dividend policy remains under review. 
As at 31 December 2009 the Group's gearing ratio was approximately 82% 
(Debt/Gross Assets) which is below the maximum borrowing limit of 95%, as set 
out in the revised Articles of Incorporation of the Company. The majority of the 
debt is limited recourse to the SPVs holding the relevant assets which means 
that, in the event that lenders decide to enforce security where the LTVs exceed 
covenant levels, lenders can only seek recourse to the asset(s) and any excess 
cash in the SPV holding the relevant asset(s) after costs as defined in the loan 
agreements. In the case of loans to SPV's in the Netherlands and France, by 
reason of a cross default clause, the lender can seek recourse to the assets of 
both SPVs in the event of a covenant breach by either SPV. Excluding one SPV 
where there is no LTV covenant, the weighted average LTV is now 87.93% against a 
weighted average LTV covenant of 76.6%. 
To date, no formal loan breaches have been declared. 
Country Weighting 
Portfolio weighting by country 31 December 2009 
+----------------------------------------+----------------------------------------+ 
|                Country                 |                   %                    | 
+----------------------------------------+----------------------------------------+ 
|                Germany                 |                  64%                   | 
+----------------------------------------+----------------------------------------+ 
|                Sweden                  |                  14%                   | 
+----------------------------------------+----------------------------------------+ 
|                Poland                  |                  12%                   | 
+----------------------------------------+----------------------------------------+ 
|            The Netherlands             |                  5%                    | 
+----------------------------------------+----------------------------------------+ 
|                Belgium                 |                  3%                    | 
+----------------------------------------+----------------------------------------+ 
|                France                  |                  2%                    | 
+----------------------------------------+----------------------------------------+ 
 
Ten Largest Properties 
(by % of Gross Asset Value 31 December 2009) 
+----------------+----------------+---------------------+------------------+----------------+ 
|                |    Country     |      Property       |    Location      |     % GAV      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       1        |    Poland      |    Buma Square      |      Krakow      |     8.81%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       2        |    Germany     |  Mosse Zentrum II   |      Berlin      |     8.13%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       3        |    Sweden      |    Karolinen 2      |    Karlstad      |     7.51%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       4        |    Germany     |  Mosse Zentrum I    |      Berlin      |     4.45%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       5        |    Germany     |    Arnulfstrasse    |      Munich      |     3.90%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       6        |    Germany     |  Schildgasse 28-30  |   Rheinfelden    |     3.40%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       7        |    Germany     |50 Kinkeler Strasse  |Neunkrichen/Saar  |     3.06%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       8        |    Germany     |  5 Schwabenheimer   |    Kreuznach     |     2.94%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|       9        |    Belgium     |  Equinox Building   |      Wemmel      |     2.61%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
|      10        |    Germany     |    Frankencampus    |    Nuremberg     |     2.41%      | 
+----------------+----------------+---------------------+------------------+----------------+ 
 
This IMS has been produced solely to provide additional information to 
shareholders as a body to meet the relevant requirements of the UK Listing 
Authority's Disclosure and Transparency Rules. It should not be relied upon by 
any other party or for any other purpose. This statement has not been audited. 
 
 
 This information is provided by RNS 
            The company news service from the London Stock Exchange 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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