PLAZACNTR (PLZ): Results for the year ended 31 December 2016 - raport 15
UNI - EN REPORT No15/2017
CONTINUING TO FULFILL BOND OBLIGATIONS AND ADVANCING ASSET SALES
Plaza Centers N.V. (“Plaza” / the “Company” / the “Group”), a property developer and investor with a focus on operations in Central and Eastern Europe (“CEE”), today announces its full year results for the year ended 31 December 2016. The full financial statement is announced separately and includes the Independent Auditors’ report with a Disclaimer of opinion.
Financial highlights:
• Reduction in total asset value to €322 million (31 December 2015: €392 million) mainly due to the impairment of trading property and repayment of interest and principal of bonds according to the restructuring plan.
• Book value of the Company’s trading properties decreased by 17% (€54 million) over the period, primarily due to the sale of Liberec Plaza and Zgorzelec Plaza shopping centres, and MUP plot in Belgrade and a significant impairment of Casa Radio project.
• The Net Operating Income (“NOI”) performance of current operational shopping centres (excluding Riga shopping centre) slightly decreased in 2016 to €11.4 million (in 2015: €12.7 million), mainly due to the disposal of the Liberec Plaza shopping centre which became effective on 31 March 2016, as well as discounts granted to new and renewed tenants. The total NOI of Plaza’s five malls including Riga Plaza (Latvia) was circa €13.8 million (three shopping centres out this five were sold during the year).
• Loss in 2016 totalled €46.5 million (in 2015: loss of €46.1 million) mainly due to a significant impairment of the Casa Radio project in Romania totalling €32.2 million as well as non-cash finance costs of €13.7 million (as a result of bonds discount amortisation). Basic and diluted loss per share reduced to €6.78 (in 2015: loss per share of €6.73) following the conclusion of a Reverse Share Split with a 1:100 ratio.
• Consolidated cash position as at 31 December 2016 (including restricted bank deposits and short term deposits) of €12.8 million (31 December 2015: €20.4 million) and current cash position of circa €10.3 million (of which €2.3 million is restricted).
• Gearing increased to 89% (31 December 2015: 79%) mainly due to non-cash finance costs mentioned above.
Further progress in portfolio rationalisation:
Since the conclusion of the debt restructuring agreement, to date Plaza has completed sales totalling €170 million and has received cash proceeds of €76 million in 2016:
• Disposal of a 23,880 sqm site in Slatina, Romania, in March 2016 for €0.66 million, consistent with the asset’s last reported book value.
• Sale of a subsidiary holding in Liberec Plaza, in the Czech Republic, on 31 March 2016 for €9.5 million. Following net asset value adjustments related to the subsidiary’s balance sheet, the Company received a net amount of €9.37 million. The majority of the proceeds from the sale (€8.5 million, reflecting 100% of the outstanding loan) were repaid to Plaza Centers Enterprises B.V. (“PCE”), a wholly owned subsidiary of Plaza, on account of the bank loan PCE acquired in September 2015 (the bank loan was provided to the SPV, the holding and operating company of Liberec Plaza). Almost €1 million of surplus cash flow was delivered by the disposal.
• A pre-agreement to sell a 15,000 sqm development plot in Piraeus, near Athens, Greece, for €4.7 million was signed in April 2016 and was later on in December 2016 revised to be on €3.5 million with possible upside depending on building rights. Final agreement has not signed yet and the long stop date of this transaction has been recently set at the end of May 2017.
• On 16 May 2016, a subsidiary of Plaza, in which the Company has a 50% stake, entered into a business sale agreement with respect to the disposal of Riga Plaza shopping and entertainment centre in Riga, Latvia, to a global investment fund. The agreement had reflected a value for the business of circa €93.4 million (reflecting 100% of the asset value), which was in line with the last reported book value. The net cash proceeds from Plaza’s 50% share of the sale of the business were €17.8 million after repayment of bank loan, with an additional €0.6 million expected to be received within the next 25 months. The transaction was completed on 15 September 2016.
• Disposal of the Company’s wholly owned subsidiary which held the “MUP” plot and related real estate in Belgrade, Serbia, for €15.75 million (to be received in several tranches), above the book value of circa €13.5 million. The sale was completed on 29 June 2016. In addition to the €15.75 million transaction consideration, Plaza will also be entitled to an additional pending payment of €600,000 once the purchaser successfully develops at least 69,000 sqm above ground. In February 2017 the Company agreed with the buyer to bring forward the payment of €4.2 million out of the third scheduled payment amount of €4.6 million in a discount transaction with a present value of circa €4.05 million. The remainder of the purchase price will be paid as originally agreed between the parties at end of September 2017.
• On 28 June 2016 the Company signed a preliminary agreement for the sale of a 20,700 sqm plot which is 62% of the whole owned land in Lodz, Poland, to a residential developer, for €2.4 million. On 28 September 2016 the final agreement was signed with payment due in three instalments of which the last one is in June 2017. 26% of another part of the site was previously sold in two separate transactions completed in 2015 and 2016 for a total value of €1.2 million. Following these transactions Plaza still owns 4,017 sqm which is 12% of the whole land for future value realisation. Plaza received an initial payment of €1.04 million, which was followed by €180,000 in November 2016 and €220,000 in December 2016, and is due to receive a final instalment of €0.96 million in June 2017.
• On 30 June 2016 Plaza signed a Debt Repayment Agreement (“DRA”) with the financing bank (the “Bank”) of Zgorzelec Plaza in Poland. On 14 September 2016, Plaza completed the sale of its shares in Zgorzelec Plaza. A Share Purchase Agreement was signed with an Appointed Shareholder nominated by the Bank, after which the DRA process was completed and a mortgage over the asset of the Company in Leszno, Poland, (valued at €0.8 million) was settled. Plaza recognised a profit of circa €10 million, stemming from the release of €23.0 million of the outstanding (and partially recourse) loan (including accrued interest thereof), against an outstanding asset value of €12 million as of 30 June 2016.
• Disposal of an 18,400 sqm plot in a suburb of Ploiesti, Romania, to a local investor for €280,000.
• An Indian subsidiary ("SPV") of Elbit Plaza India Real Estate Holdings Limited (in which Plaza holds a 50% stake with its joint venture partner, Elbit Imaging Ltd.) signed a Joint Development Agreement relating to its 74.7-acre plot in Chennai, India, to transfer the property development rights to a reputable local developer. The SPV will receive 73% of the total revenues from the plotted development and 40% of the total revenues from the eventual sale of the fully constructed residential units in instalments subject to development milestones.
• On 13 October 2016 Plaza signed a preliminary sale agreement for the disposal of a 2.47 hectare plot in Kielce, Poland, for €2.3 million. As part of the sale process, Plaza has received a down payment of €465,000, while the outstanding amount will be paid within eight months of the date of the agreement at June 2017.
Operational highlights
o At Torun Plaza, Poland, following a process of extending lease agreements following five years since the mall opened,, the occupancy slightly decreased to 95% (2015: 96.8%) while turnover and footfall remained stable.
o Suwalki Plaza was sold after the end of the period having been 98.7% leased (YE 2015 96.5%), and with a 18% increase in turnover in 2016 and 10% increase in footfall, compared to 2015 year.
o The letting process and construction of Belgrade Plaza has been continued to expectations. On opening 97% of the mall was let and the successful opening occurred in line with the planned schedule on 20 April 2017.
Key highlights since the period end:
• Since the year end, Dori Keren officially became Chief Executive Officer on 1 January 2017, having been Acting CEO since April 2016.
• On 26 January 2017 Plaza announced that one of its subsidiaries signed a binding share purchase agreement with BIG Shopping Centers Ltd., a publicly traded company in Tel Aviv Stock Exchange (the “Purchaser”), for the sale of the Belgrade Plaza shopping and entertainment centre. Belgrade Plaza (Visnjicka) has been the largest development underway in Serbia. Plaza is still responsible for accounting for the final development cost and leasing of the asset until the adjustment date. Upon completion of the transaction, Plaza received an initial advance payment of €28 million (plus €3.7 million customary NAV adjustments) from the Purchaser for the sale of 100% of the SPV, which will be followed by further payments during the first year of operation subject to certain operational targets and milestones being met. The Purchaser provided a guarantee to secure these future payments. The final agreed value of Belgrade Plaza, which will comprise circa 32,300 sqm of GLA, will be calculated based on a general cap rate of 8.25% on the basis of cash collected as well as the sustainable NOI after 12 months of operation, which the Company estimates will be approximately €7.2-7.5 million per annum. The sustainable NOI will be re-examined again after 24 months and 36 months of operation, which may lead to an upward adjustment of the final purchase price. Plaza has a line of credit from a financing bank for the development of Belgrade Plaza to a maximum amount of €42.5 million. On 20 April 2017 the construction of the centre was completed and the shopping centre was 97% let and is expected to be fully leased in the coming months. Plaza has received €2 million for fulfilling its conditions around the successful leasing milestone at the opening of the centre. Belgrade Plaza is the 34th shopping centre built by Plaza and its second scheme in Serbia.
• On 1 February 2017 Plaza announced that one of its subsidiaries (“SPV”) completed the sale of Suwałki Plaza shopping and entertainment centre in Poland to an investment fund for €42.3 million, which is in line with the last reported book value. Having completed the transaction, the Company received circa €16 million net cash, after the repayment of the bank loan (circa €26.6 million) and other working capital adjustments in accordance with the balance sheet of the SPV.
• On 17 February 2017 Plaza announced the sale of David House, a 2,297 sqm office building in Budapest, Hungary, for circa € 3.2 million, which is above book value. On 23 February 2017 Plaza concluded the sale of a 26,057 sqm plot of land in Shumen, Bulgaria, for circa €1 million, which is slightly above book value.
• On 23 February 2017 Plaza concluded the sale of a 26,057 sqm plot of land in Shumen, Bulgaria, for circa €1 million, which is slightly above book value.
• Compliance of the Early prepayment term – On March 15, 2017 the company paid its bondholders a total amount of NIS 191.74 million (EUR 49.2 million) as early redemption and accordingly, upon such payment the Company complied with the early redemption at the total sum of at least NIS 382,000,000 and thus obtained a deferral of one year for the remaining contractual obligations of the debentures.
• On 21 April 2017 Plaza Centers regarding its Romania project Casa Radio has received immunity from certain potential criminal charges from the relevant Romania Authorities and was assured that the mentioned investigation should have no effect on the Company’s existing legal rights to the Project and the Public-Private Partnership Agreement signed with respect thereto. As the investigation of the Romanian authorities is still on-going Plaza is still co-operating fully with the relevant Romanian Authorities. The Company is unable to elaborate any further in this respect due to restrictions coming from of a self-disclosure process.
• On 4 May 2017, further to its announcement dated 15 September 2016, regarding the preliminary sale agreement to dispose of the Leszno plot in Poland, announced the completion of the final sale agreement has been postponed by 2 months. In line with the signed agreement, the purchaser had the right to withdraw from the transaction within a window of eight months which was due to end on 28 April 2017. The purchaser recently requested that the decision is postponed by two months which extends the agreement to 30 June 2017. Plaza has signed an annex to the sale agreement which has allowed this extension to take place.
Commenting on the results, Dori Keren CEO of Plaza Centers, said:
“Our aim for 2016 was to substantially increase the pace of converting assets to cash in order to fulfil our repayment obligations to bondholders. Undoubtedly, we have delivered on this objective by agreeing or completing 10 separate such transactions during the period and progress continues into 2017.”
“Focus remains on seeking potential buyers for selected non-core assets which have become less fit for development by us. At a corporate level, we have reduced central and finance costs, and continue to focus on the improving the performance at our operating shopping centre.
“Overall, we are making good progress and have already shown accelerated sales and still have a pipeline of disposal opportunities going forward, all with a focus on delivering for our stakeholders.”
The full year results for the year ended 31 December 2016 are available for viewing on the Company's website at http://plazacenters.com/index.php?p=financial_reports_2016
For further details please contact:
Plaza
Dori Keren CEO
+48 22 231 99 00
FTI Consulting
Dido Laurimore / Claire Turvey / Tom Gough
+44 20 3727 1000
Notes to Editors
Plaza Centers N.V. (www.plazacentres.com) is an emerging markets developer of shopping and entertainment centres with operations in Central and Eastern Europe and India. The Company is listed on the Main Board of the London Stock Exchange, the Warsaw Stock Exchange and, as of 27 November 2014, the Tel Aviv Stock Exchange (LSE: “PLAZ”; WSE: “PLZ/PLAZACNTR”; TASE: “PLAZ”). Plaza Centers N.V. is an indirect subsidiary of Elbit Imaging Ltd. (“EI”), an Israeli public company whose shares are traded on both the Tel Aviv Stock Exchange in Israel and the NASDAQ Global Market in the United States. It has been active in real estate development in emerging markets for over 21 years.
Forward-looking statements
This press release may contain forward-looking statements with respect to Plaza Centers N.V. future (financial) performance and position. Such statements are based on current expectations, estimates and projections of Plaza Centers N.V. and information currently available to the company. Plaza Centers N.V. cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. Plaza Centers N.V. has no obligation to update the statements contained in this press release, unless required by law.
