Bulgarian Property Developments Share Discussion Threads

[fft] 07/1/2005 08:35

Thanks for that energyi. Do you have any clue where these plots of land are ? Thought i might drive past them with an estate agent in a couple of weeks time and have a look....

[mangal] 06/1/2005 21:26

energyi, thanks for the links(post 86), which I've put in the header; thanks

[ratters] 06/1/2005 21:00

dwelshmafia,

Please take care my friend.
I have been doing biz in/with Bulgaria for several years.
It was the only one Eastern Bloc country I did not do biz with in the 80's.
Since 1990 it has undergone enormous swings and roundabouts.
Finally, only a year or so ago, it began to really turn the corner.
But I guess you know nothing about the legacy of the Todor Zhivkov regime - and the immensely corrupt regime in those days - or the subsequent corruption it spawned.
Believe me - do not take upbeat reports at their face value.
If you do - then you will simply fall flat on your face.
If you want to invest in Bulgaria then go for shares in a company that has interests there - and is governed by UK law - and has competent directors.
I believe that BPD has possibly all those attributes - but will not be a get rich quick shareholding.
It will be a long haul - but I am sure it will become a profitable one over the next 2/3 years.

Caveat emptor.

[hectorp] 06/1/2005 20:03

I suppose it would be possible ( with compound growth of 20-30% a year for the next 3-4 years in property values?) of a share price of 2-3 quid.

I missed out and in fact never saw this share till yesterday.. so I'll be waiting for a chance to get in lower , in a few weeks perhaps.

[dwelshmafia] 06/1/2005 19:26

where was nexts shares years ago arond 5p,arm went to 50 quid, nat west bank,houses in u.k 500 quid ,or less now 300,000 pounds or more .intel was small, microsoft reset my case

[dwelshmafia] 06/1/2005 17:57

is the best place to put your money in and bpd is the best play on the property for bulgaria.the weeknes in share price is due to the boys( market makers) shaking the tree to get the punters out,dont be put off by them sell was small to buyers.the mm's playing games for you to sell stock.this stock will be the best stock for 2005,come back in jan 2006 and you will see it 5 or 6 pounds with out fail.

[energyi] 06/1/2005 16:35

INTERVIEW WITH IVO...


Bulgarian Property Developments ("BPD")
--------------------------------------------

BPD is a new fund with a mission to invest in Bulgaria. Established recently with £1.2 million plus of seed capital from a handful of wealthy private investors, the company is now seeking to round out its capital to £3-5 million as part of an exercise which should lead to it taking an Ofex quote before year end.

Ivo Hesmondhalgh is one of two of the founders. He has a background in property, mostly in the UK where he has managed small scale property investment schemes for EIS and BES companies. Some months ago, he was asked by one of his friends, the head of a large global hedge fund, to travel to Bulgaria to investigate property related opportunities in that country. The visitors were encouraged by what they saw.

During the trip, they met Philip Pashov, a Bulgaria who had worked in various governmental departments, dealing with Tourism and attracting foreign investments. The two hit it off, and with the prinicipal backing of their hedge fund friend, decided to launch a new company focussed on property opportunities in Bulgaria. Ivo will be involved in the fundraising, the strategy, and the final selection process. And Philp Pashov, will use his Bulgarian contacts and knowledge of the local scene to source opportunities. There are also two high profile Brits, as non-executive directors to assure smooth corporate governance.

I found Ivo's views on prospective growth were somewhat less bullish than others I have interviewed. He said that the days of 30% per annum growth in property values were ending. He remains upbeat, citing a collection of reasons: low prices, location within the EU, a motivated and educated workforce, and the likely stream of future development aid, why Bulgarian property values should continue to rise in the medium to long term. A "double or triple over 6-7 years" would not surprise him, but the rate of increase, he thought, was slowing down to a more sustainable 10-15 percent per annum. Signs of a slowdown were already evident in the commercial sector, where rents have stagnated over the past 12 months, due to an excess supply of new properties around the ring road.

BPD's approach is to focus on a niche: warehouses and distribution, which has not been overbuilt, and which is expected to show promising returns in the years ahead. As to location, they intend to focus on Sofia, and possibly the ski areas. The large number of new developments on the Black Sea, and uncertainties of locking in rental returns on seasonal resort investments, makes the coastal area less attractive. Varna has good potential, but more in its central city, not its resort areas. (More about the company's focus in the Prospectus, see below.)

The biggest challenge for the company at this stage is raising capital. They are fortunate, in that they already have sufficient commitments to move forward and get the Ofex quote, but their economies of scale will improve dramatically if they hit their £3 million target. The company charges a management fee of 3%, so at the £2 million level, it pays only £60,000 annually. It also pays out a share of profits of 20%, but this will only be paid when realised, and so may be years away. Fortunately, in case the growth is slower than they anticipate, his other UK property activities should provide sufficient income for Ivo to keep his overall management business healthy.

Not surprisingly, Ivo believes that an ideal first investment for someone interested in Bulgaria investments would be to take shares in a fund like BPD. If someone buys property by himself he has the problem of finding good value in an unfamiliar market with a different language and alphabet, the need to rent and manage the investment, and the hassle of setting up a Bulgarian vehicle, since non-Bulgarians are not allowed to own land directly. The Fund structure solves these problems and gives economies of scale.

The experience and contacts of management will also help reduce the risks. Apparently, it is not unusual for Bulgarians to bump up their asking prices by a factor of 50% or more, when they discover that a foreigner wants to buy. There may also be some capital gains advantages when a UK resident buys BPD shares, and holds them, and then sells them as an Ofex or AIM quoted shares. Incidentally, an AIM quote is something that will be seriously entertained, when company NAV approaches £10 million, says Hesmondhalgh.

Best capital gains, Ivo reckons, will come from land investments. And this is where the local expertise will be critical, since many Bulgarians are wary of selling to foreigners. BPD expects to announce a significant land acquisition soon, and this would boost its immediate prospects, since the land will be suitable for almost immediate development. Further out, they want to achieve a healthy balance between land and income generating properties. While land may generate stronger gains, it costs money to carry it, and the yields on a warehouse oor distribution centre could carry the land investments through the months needed to assemble attractive land packages, and/or through to development.

It will be interesting to see how the stock market rates the BPD opportunity, since Bulgaria is certainly a hotspot for direct property investments. Those who seek to invest should know that there is a £5,000 minimum subscription, and the price is being held at 50P a share, the same level as management and founder investors have paid. And they will not need to wait forever to see a dividend. The company plans to payout 1/3rd of their distributable profits after year three.

To gain a copy of the Prospectus, or to learn more, Ivo Hesmondhagh can be contacted at the email or phone number given above at left. Or alternatively, Donald Mackinnon or Ken Vere Nicol at Matrix (phone: [phone])


On: www.BulgariaHotspot.com (h: 11,282)
Here's the LINK:

[cockneyrebel] 06/1/2005 16:33

Just been watching 'A Place in the Sun' on Channel 4 - Amanda Lamb reckons property in Bulgaria is rising at 100% per annum or more in places.

Punters were gobbling these up at 130p yesterday.



CR

[fft] 06/1/2005 14:45

Peter, i am in Sofia in 10 days for a couple of weeks. Maybe we could meet up at some point.

[peterstilgoe] 06/1/2005 14:17

No probs, off to Bulgaria again in a few weeks, flying Air Hemus from Sofia to Varna, should be fun :-/ lol

[fft] 06/1/2005 14:13

On second thoughts, Mladost 4 would be a good location. A lot of new Hypermarkets have opened there along with new business parks and technopolis (the only place to buy electrical stuff in Sofia). Momentum is being generated there. A bit far from the airport to claim it is "near" though.

Peter, if you could give me some details tomorrow that would be great.

[peterstilgoe] 06/1/2005 14:08

Ive got the prospectus on my desk but dont think it specifies the exact location of the land, I will check tomorrow.

[fft] 06/1/2005 14:02

Does anyone have a website for this company or have the exact addresses of the 6 plots of land they own ? I hope they dont mean Mladost 4 !

[stevewhall] 06/1/2005 13:31

guys - bulgarian goverment signing off proposal for foreigners to own land this march/april i think - do a search and you'll find it somewhere - only announced in the last week or so!

bought an off plan apartment in Sveti Vlas November 2003 (2 bed - 2 bath - virtually on the beach for 50k)...... now worth about 75k...

think you've missed boat now on this share - try www.opiuk.com who will be launching soon on Ofex (i've been an investor with them since they started afew years ago)

also looking to buy in bansko/borovets when funds allow..

however untested market as yet for selling on the off plan apartments so not for the faint hearted.

[the juggler] 06/1/2005 13:24

On that advice I shall continue to watch for a few days yet

[peterstilgoe] 06/1/2005 13:14

Agree ratters, I have had the prospectus on my desk for a few months umming & arring whether to subscribe @ 50p, I didnt for the reasons you say, newsflow will (I think) be slow & the share would become illiquid. I expected it to fall below 50p in the 1st week. In hindsight a costly mistake but I cant see how it can be sustained without news.

[spiv 1] 06/1/2005 13:06

Buy in at 50p no higher. These will become very illiquid to deal in very soon. Only 90000 shares traded today so far and this will fall off very quickly to a trickle.
If you can get in at a sensible price and hold for 3 years then could be a good one.

[the juggler] 06/1/2005 12:09

Ratters - I am doing exactly the same. In the long term though these must be worth holding. Once bought I will probably tuck them away and see what gives when Bulgaria joins the EU in 2007.

[ratters] 06/1/2005 11:56

Juggler

Think you may get them cheaper than that in the very short term.
I am just watching for timebeing.
Since they are a property development company I am worried that they may be unable to report anything interesting for some time - and the share price could fall gradually until they can.

[the juggler] 06/1/2005 11:51

I might just get these for 80p after all!

Best do some research into them LOL!

[declan2] 06/1/2005 11:44

What is this co.'s market capitalisation?

[ratters] 06/1/2005 10:41

Peter, fft et al,

Yes I now know that the airport expansion has actually started and I have been advised that there is a ring road of sorts.
Property prices in the airport area "have skyrocketed in the last year (actually not only there but everywhere in Bulgaria and especially in Sofia and the resorts). Actually a lot of buyers are from the UK as for the Brits the prices are still very low compared to Europe.
The real estate market is going crazy. There are people from everywhere in Europe buying land, buildings, houses and apartments like they havn't seen such things. It really is amazing. Just for your information the Brits visiting Bulgaria every year are at least 50-60% more than the previous year.
It seems they have found a substitution for Spain at a reasonable price and they buy summer houses or just invest their money.
There is also another Greek Property development company called Interlodgic Property which was listed on the Bulgarian Stock Exchange (BSE) 3 months ago
(they made an IPO in Bulgaria) and their share price went up by 1324%. Yes you saw the right figure - 1324 percent). From 40 leva a share they are trading today for 549.42 leva per share."

Above is quoted from my Bulgarian friend's e-mail last night.
I am sure he will not mind me quoting it to you all.

[fft] 06/1/2005 10:06

Suntan.

You set up a company (which you own 100% of), the company buys the land/property. So the company owns the land/property, but since you own 100% of the company there is very little practical difference, except for the need to do accounts every year - and the odd other little bit of paperwork. Since you own a company, you can also apply for a 1 year visa (rather than the 3 month limit).