REG-Eurocastle Inv. Ltd Issue of Equity
Released: 24/01/2006
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, OR INTO, THE UNITED STATES, DIRECTLY OR INDIRECTLY, CANADA, AUSTRALIA OR JAPAN
Eurocastle Investment Limited (“Eurocastle” or the “Company”)
Proposed Offering of New Shares to Raise Approximately €350 million Guernsey. 24 January 2006 - Eurocastle (Euronext Amsterdam: ECT) is announcing today its intention to raise approximately €350 million through an offering (the “Offer”) of new ordinary shares (the “New Shares”). An institutional bookbuilding process is expected to be completed on or around 30 January 2006, following which the number of New Shares being offered in the Offer and the offer price per New Share will be announced.
It is expected that the net proceeds of the Offer will be used to fund the €2 billion real estate acquisition that Eurocastle announced on 22 December 2005 of a portfolio of 303 commercial properties in Germany from Dresdner Bank AG (the “Dresdner Portfolio”) through the purchase of all the units of a German public, open-ended real estate fund (the “Dresdner Acquisition”). If the Dresdner Acquisition does not get completed, the net proceeds of the Offer would be used to acquire further investments in accordance with the Company’s investment guidelines to increase the size and diversification of the Company’s portfolio.
The Dresdner Portfolio consists primarily of office buildings and comprises approximately 9 million square feet (approximately 840,000 square metres) of leasable space, located throughout Germany. They are occupied as to approximately 80% (measured by rental income) by Dresdner. The average remaining lease term of properties in the portfolio that are leased to Dresdner is 8.5 years, while the average remaining lease term of the entire portfolio is approximately 7.5 years. Approximately 81% (by lettable floor space) of the portfolio is currently occupied. Upon acquisition, the Company expects the Dresdner Portfolio to have a rental yield (unleveraged) of approximately 5%.
Completion of the Dresdner Acquisition is conditional upon the satisfaction of customary conditions for a transaction of this nature and is expected to occur in February 2006. It will be funded by equity and debt financing. The equity financing will comprise the proceeds of the Offer and the proceeds of an investment by certain funds managed by Fortress Investment Group LLC (the “Fortress Funds”).
The principal terms of the Fortress Funds investment were agreed on 22 December 2005. If the Offer raises the intended €350 million, conditional upon the completion of the Dresdner acquisition, the Fortress Funds will invest €150 million by subscribing for Shares at €17.50 per Share (representing an approximately 2.75% discount to the weighted average share price for the Company’s shares over the 10 day period up to 21 December 2005). If, however, the Offer raises less than €150 million, they will invest up to an additional €150 million in the Company.
The Company will grant an over-allotment option to the stabilising manager on behalf of the underwriters to acquire additional New Shares representing up to 10 per cent of the Offer at the offer price. If the over-allotment option is exercised, and based on an assumed offer price equal to the closing price of €25.85 per Share on 23 January 2006, the number of New Shares that would be issued in the Offer would represent approximately 38 per cent of Eurocastle’s enlarged issued share capital.
Commenting on the Offer, Wesley R Edens, Eurocastle’s chief executive, said:
"The Dresdner acquisition provides Eurocastle with an attractive opportunity to accelerate our stated strategy and interest in Germany. This transaction will mark a significant transformation for Eurocastle, making us the largest listed owner of commercial real estate in Germany. With our diverse portfolio of high quality assets throughout Germany, we believe it will provide us with a competitive advantage as we continue to pursue our successful strategy of acquiring commercial assets in Germany."
Eurocastle’s policy is to pay all or substantially all of its earnings to Shareholders in the form of regular quarterly dividends. Eurocastle today intends to announce its Q4 2005 dividend of €0.37 per Share representing an increase by 12.1% from €0.33 per share in Q1 2005.
Deutsche Bank AG, Goldman Sachs International and Morgan Stanley & Co. International Limited have been appointed as joint lead managers and joint bookrunners in respect of the Offer. Kempen & Co N.V. and Dresdner Kleinwort Wasserstein have been appointed as co-lead managers.
About Eurocastle
- Eurocastle is a Euro denominated closed-ended investment company incorporated in Guernsey and managed by Fortress Investment Group LLC;
- Eurocastle invests in and manages a diverse portfolio consisting primarily of European credit-leased real estate and real estate related debt;
- Eurocastle’s net profit after taxation was €29.6 million for the nine months ended 30 September 2005 or €1.39 per diluted share (compared to €6.9 million for the nine months ended 30 September 2004)
- The Company’s Shares were admitted to listing on Eurolist by Euronext Amsterdam and to trading on Euronext Amsterdam’s market for listed securities on 15 December 2005, and its listing on the London Stock Exchange was cancelled on 22 December 2005
- Since the initial public offering in June 2004, the Board of Directors of the Company has declared total dividends of €2.05. The dividend per Share for the year ended 31 December 2004 was €0.63. The dividend per Share for the three month periods ended 31 March, 30 June, 30 September and 31 December 2005, was €0.33, €0.35, €0.37 and €0.37 respectively, representing a dividend per Share for the year ended 31 December 2005 of €1.42.
For further information please contact:
Deutsche Bank AG
Rishi Bhuchar, Tel: +44 (0) 20 7545 5963 / +44 (0)7740 052 571
Goldman Sachs International
Jeremy Sloan, Tel: + 44 (0) 20 7552 1598
Morgan Stanley & Co. International Limited
John Porter, Tel: +44 (0) 20 7677 3301
This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any shares referred to in this announcement except on the basis of information in the prospectus to be published by the Company in due course in connection with the admission of the New Shares to listing in Eurolist by Euronext Amsterdam and to trading on Euronext Amsterdam’s market for listed securities (the “Prospectus”). Copies of the Prospectus will be available from the Company’s registered office following publication.
Each of Deutsche Bank AG, Goldman Sachs International, Morgan Stanley & Co. International Limited, Kempen & Co N.V. and Dresdner Kleinwort Wasserstein is acting for Eurocastle in connection with Offering and no one else and will not be responsible to anyone other than Eurocastle for providing the protections offered to clients of Deutsche Bank AG, Goldman Sachs International, Morgan Stanley & Co. International Limited, Kempen & Co N.V. or Dresdner Kleinwort Wasserstein as the case may be nor for providing advice in relation to Offering or in relation to the contents of this announcement or any other transaction, arrangement or matter referred to herein.
These materials may not be distributed, directly or indirectly, in or into the United States, Canada, Australia or Japan. They are not an offer to sell or the solicitation of an offer to buy the securities discussed herein.
This announcement does not constitute an offer of securities for sale in the United States. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933 (the “Securities Act”), and may not be offered or sold in the United States, or to, or for the account or benefit of, US persons (as such term is defined in Regulation S under the Securities Act) unless they are registered under the Securities Act or pursuant to an exemption from registration. No public offer of securities is being made in the United States. In addition, the issuer of the securities mentioned herein has not been and will not be registered under the U.S. Investment Company Act of 1940 and Investors will not be entitled to the benefits of such act.
Stabilisation/FSA
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