Recent articles
Dawn of the Romanian EmpireRomania’s richest man, Dinu Patriciu, is taking advantage of the turmoil among small, London-listed companies to build a pan-European investment empire....
Romanians are less and less willing to save or the incomes they have available for saving are dwindling, reveal data from the NBR, which point to the lowest annual rise for deposits in RON - of 15.5%....
Home » Press centre » Dawn of the Romanian Empire
Dawn of the Romanian Empire
Romania’s richest man, Dinu Patriciu, is taking advantage of the turmoil among small, London-listed companies to build a pan-European investment empire
There is nothing like a recession to shake up the listed property sector.
While the UK’s real estate investment trusts and the big European property companies have been refinancing their debt and carrying out discounted equity issues to bring in much-needed cash, the small London-listed overseas property funds – mainly listed on the London Stock Exchange’s junior AIM market – have been under fire from activist investors and subject to takeovers.
So far this year, of the 70 or so ‘tiddlers’, China Central Properties, Summit Germany, Bulgarian Property Developments and Fabian Romania have been taken over, Puma Brandenburg is in the process of being taken over, Rutley European and Spazio Investment have received takeover bids and Delek Global Real Estate and Canton Property Investment have delisted. Several other companies, such as Trikona Trinity, Hirco and Speymill Macau, have come under attack from activist investors and hedge funds.
The reason for all this activity is that these companies provide a great money-making opportunity. Their shares are ignored by analysts and utterly depressed. Invariably, they have run out of cash, are highly leveraged and have breached or are in danger of breaching loan covenants. Their external management structures are out of favour, the fees they charge are too high, and many are also developers in countries that once were emerging but are now submerging.
Of the companies that have or are about to be delisted, China Central, Summit Germany, Puma Brandenburg and Delek Global were taken private, at much lower prices, by the very shareholders that floated them in the boom years before the credit crunch.
Rich pickings
But the leading figure is Dinu Patriciu who, according to Forbes, is the richest man in Romania and the 397th richest person in the world, with a fortune of $1.8bn (£1.1bn).
Through a new company – Black Sea Global Properties, a subsidiary of his Swiss-domiciled company Rompetrol Holding – Patriciu has bought Fabian Romania, which owns €138m (£118m) of Romanian assets. He has also made an offer to buy Rutley European and is set to become the majority shareholder in Deutsche Land.
Before he made his offer to buy Fabian Romania on Christmas Eve last year, Patriciu was unknown in the property world outside his home country. He is by no means a conventional property investor. An architect by training, he taught architecture until 1989. And between 1990 and 1996, and again from 2000 to 2003, Patriciu served as a member of the Romanian parliament, and was a leader of the National Liberal Party’s parliamentary group.
‘My first business after ’89 was real estate,’ he says. ‘I did real estate for two years, then moved into energy, thinking that would be the first sector to take off in a transition economy. But I kept my real estate.&rsquo
Moving into energy proved a wise decision. He founded Rompetrol Group and turned it into the second largest oil company in Romania. In 2007, he sold a 75% stake to Kazakhstan’s state-owned energy operator, KazMunaiGaz, at a price that implied an enterprise value of $3.6bn (£2.2bn).
“I did real estate for two years, then moved into energy. But I kept my real estate” |
| Dinu Patriciu, Black Sea Global |
His offer of €1 a share through Black Sea Global reflected a 40% discount to Fabian Romania’s net asset value at 30 September 2008 of €1.66 a share. But Fabian argued that because of the lack of investment transactions in Romania, there could be ‘no certainty that the yields which were used in determining the NAV accurately reflected the open market’.
Critical mass
Patriciu says: ‘We analysed it last autumn and saw it was one of the high-level portfolios in Romania with critical mass.’
His chief executive, Obie Moore, an American who heads a team of 20 property people at Black Sea Global, says the purchase of Fabian Romania was the start of the plan to create a pan-European property company. ‘It was a good opening first target for us,’ he says. ‘We know that market very well and it was easier for us to come to a recommended offer’.
Now Patriciu and Moore have set their sights on two more companies: Rutley European and Deutsche Land. On 12 June, Black Sea Global made a £12.56m cash bid for Rutley European and subscribed for 94.9m shares in Deutsche Land as part of a wider placing of shares by the AIM-listed German investor.
Black Sea Global is offering 6p a share in cash for Rutley European – the listed fund managed by Knight Frank’s private equity arm, Rutley Capital Partners. This attributes an enterprise value to Rutley European of £446.6m, which includes its net debt of £434m.
The offer is more than double the 2.9p at which Rutley European’s shares were trading before it said it had received approaches on 27 March. However, it is below the current 6.88p share price of Rutley European and reflects a discount of 87% to the net asset value of 45p a share at 31 March.
Black Sea only owns 0.1% of Rutley European’s shares and has not revealed any acceptances for its offer from the company’s shareholders.
It could face a bid from a rival party. Last November, Rutley European’s board, chaired by David Pinckney, effectively put the company on the market, when it said it had asked broker Cenkos Securities ‘to provide strategic advice on the options available to the company, and is considering the alternative uses of present and future cash reserves’.
The reason for the sale was the wide discount to net asset value at which the shares were trading and the lack of trading volumes in the shares.
“Some people might think we are crazy for going in this direction, but we want to be value-added investors” |
| Obie Moore, Black Sea Global |
If Black Sea Global is successful in its bid, it intends to use Rutley European as its main pan-European property vehicle.
‘We want to keep it listed, as it fits in with our long-term strategy of having a London-listed real estate platform,’ says Moore. ‘But there is no guarantee of that because our offer is for 100% of the shares with the only condition that we get over 50%. So, if we go over 75%, we would not be able to retain the listing without selling down some of the shares. The debt is problematic, which is why some people think we are crazy for going in this direction, but we want to be value-added investors in this process.’
Rutley would buy assets from Black Sea Global and Rompetrol and might also carry out an equity fundraising. Its management would also be internalised – Patriciu and Moore are not fans of externally managed companies. ‘Our experience of external management is that you spend all the time on board meetings dealing with calculations and evaluations regarding the fund managers, rather than dealing with the property business,’ says Moore.
On 12 June, Black Sea also bought 94.9m shares in Deutsche Land at 12p each for a total of £11.4m. It became the company’s largest shareholder and plans to invest a further £20m in the company by buying 167.5m new shares at 12p each. This would raise its shareholding to 54.1%, but the deal is subject to a waiver from the UK’s Takeover Panel of the obligation to make an offer for the entire company.
Going Deutsche
Is Patriciu’s ultimate aim to take full control? ‘We’ll see how things develop,’ says Moore. ‘We think it’s a good company to be in right now and are happy to be taking a major shareholding. It has a good manager. We would help them restructure the debt and the loan-to-value ratios, and then we’ll see where we go from there.’
Deutsche Land’s portfolio was valued at €560m (£478m) at the end of 2008 and its net asset value was 54.8p a share. It plans to internalise its management by the end of July. The external manager, Deutsche Land Management, was co-founded by Deutsche Land’s CEO, David Maxwell.
If Patriciu is successful in his bid for Rutley European and his sharebuying at Deutsche Land, he will be in control of one of the largest pan-European property companies.
‘We think we can add value, particularly at those companies that are listed on an exchange and that grew up at a time when there was a lot of bank capital for financing projects,’ says Moore. ‘Now they are all overleveraged and need debt restructuring. We have some concerns about these issues because sometimes when you buy companies, you don’t have all the information regarding the debt. So we are cautious about that, but believe we can add value.’
Other wealthy investors will, no doubt, agree because the consolidation of the London-listed overseas property funds has only just begun.
Related files
Source: www.propertyweek.com
Other articles
Population's deposits barely see a rise, despite still high interest rates
Romanians are less and less willing to save or the incomes they have available for saving are dwindling, reveal data from the NBR, which point to the lowest annual rise for deposits in RON - of 15.5%.
Owners of Tractorul site ask banks for 100m euros
The first stage of development of the Coresi project on the 120 hectare site of the former Tractorul plant in Brasov will include a shopping complex with a 90,000 square metre lettable area, for which the owners of the project, the Centerra Capital Partn
Is relaxation of lending terms coming?
Bankers have become much more cautious when it comes to granting real estate loans since the beginning of the year, but now have to relax terms in order to find clients for loans.
Cheapest real estate fund: Lewis Charles is now worth less than 2m euros
British investment fund Lewis Charles, which had announced investments of around 200 million euros on the Romanian market, now has a capitalisation of 1.66 million pounds sterling (1.88 million euros), after the shares of the London Stock Exchange-listed
Piraeus asks shareholders to come up with 20m euros
The management of Piraeus Bank Romania proposed an over 20 million-euro capital increase to the shareholders, by capitalising part of last year's profit, as well as by a cash contribution.
Carrefour to open 2-3 hypermarkets in 2009
French hypermarket network Carrefour will reach 25-26 operating stores by the end of this year, in the wake of overall investments put at 60-80 million euros, half the value of expansion projects completed by the company last year.
Sun Plaza close to completion: Cora gets its designated space
French EMCT company, which is developing the Sun Plaza mall in southern Bucharest, is now almost done with the project, turning over the space allotted to the hypermarket in Sun Plaza and setting October 29 as the date to inaugurate the biggest shopping
Mortgage loans resume growth in April, while consumer loans continue to fall
Mortgage loans managed to resume growth in April - if the exchange rate impact is eliminated - after two consecutive months of decline, but bankers remain sceptical and expect fresh positive news before they can put their faith in a market rebound. Howev
Hercesa invests over 500 million Euro in Romania
Interested in responding to the high demand on the residential market, Hercesa Imobiliara, a real estate developer, has set a development plan for Romania that includes investing 500 million Euro for the construction of more than 5,500 apartments in the
Romania real estate market still attractive
Although the cost of construction is up, the yield for offices is down, and the average price per sqm for transactions went up six times in the last five years, the Romanian real estate market is still a top destination in terms of profitability. The ong
Economic data: Romania
From the Economist Intelligence Unit
Source: Country Data
Forecast: Romania Outlook for 2009-10
From the Economist Intelligence Unit
Source: Country Forecast
Balkan blushes: Romania, Bulgaria, and the EU
BY THE polite standards of Brussels, it was quite tough. On July 23rd the European Commission issued critical reports on Bulgaria’s and Romania’s progress (or lack of it) in fighting corruption and spending European Union money. Yet after intense lobbyin
Mr Too Clean?
FIGHTING corruption in a country that tolerates it is a lonely job, and Daniel Morar may not have his for much longer. Intensely disliked by most of Romania’s politicians and vilified in the media, he reaches the end of his term as head of the Romania’s
The party is nearly over
IT HAS gone on splendidly for years, and the party isn’t quite finished yet. For a decade or more eastern Europe has benefited from exceptional (and mostly unforeseen) good fortune. Economic and political stability, including for ten countries membership
Stopping the rot
JUST another week’s news in eastern Europe: Latvia, after vehement denials, starts talks with the IMF; Bulgaria loses €220m ($286m) in promised payments from the European Union because of its failure to tackle corruption; and the European Bank for Recons
Mortgage loans resume growth in April, while consumer loans continue to fall
Mortgage loans managed to resume growth in April - if the exchange rate impact is eliminated - after two consecutive months of decline, but bankers remain sceptical and expect fresh positive news before they can put their faith in a market rebound.
Study on the affordability of housing in Cyprus
Using data from the Cyprus Statistical Service and the Nicosia Land Registry for the years 1998-2008, Antonis Loizou & Associates analyzed the drivers behind the increase in real estate prices as well as the affordability of housing by locals.
Heitman Perspective: Central & Eastern Europe and the Financial Crisis
Stock investors now spend less time with companies’ income statements and more time with their balance sheets, looking for ticking debt bombs. In the same way, investors in international real estate must expand their analysis of countries beyond GDP grow
Land around Bucharest remains at 2008 prices, but plots for sale are smaller
The average price of land in the area surrounding Bucharest was of 353.4 RON/square metre in March, similar to that recorded in March 2008, but sellers now put up smaller areas.
Asmita Gardens, suspended for 20m-euro debt
The construction site of the 800-apartment Asmita Gardens residential project in Bucharest, which will consist of seven tower blocks with 16, 20 and 24 floors was suspended indefinitely by Austrian builder Strabag on Tuesday, as a result of Asmita Garden
Apartments 30 minutes away from Bucharest's centre are 20-25% cheaper
The average price of apartments on the outskirts of Bucharest - Drumul Taberei, Berceni, Vitan Mall and Crangasi - has fallen by over 20% this year.
More than 20% declines of the year have been recorded in the 13 Septembrie and 1 Mai areas, as well, s
Fly-to-let: the best places to buy an investment property overseas
As fly-to-letters become ever more adventurous, which destinations offer the best prospects? As recently as a decade ago, who would have thought of buying a flat in Tallinn, Sofia or Prague?
Χρηματοδοτήσεις με μέτρο και στα Βαλκάνια
«Κλείνουν τις κάνουλες χρηματοδοτήσεων» και στα Βαλκάνια οι ελληνικές εταιρείες leasing, καθώς λόγω της εν εξελίξει παγκόσμιας οικονομικής κρίσης εφαρμόζουν αυστηρότατους όρους εγκρίσεων για συμβάσεις. Την ίδια τακτική, άλλωστε, εφαρμόζουν εδώ και δύο μή
Σόφια και Βουκουρέστι αναζητούν διέξοδο
Εκτιμήσεις ξένων τραπεζών αναφέρονται σε πιθανούς αναπτυξιακούς ρυθμούς της τάξεως του 2,3% για τη βουλγαρική οικονομία το 2009, ποσοστό συγκριτικώς χαμηλό, αλλά όχι και οικτρό…
Δυναμικό γ΄ τρίμηνο για την Cosmote Ρουμανίας
Επενδύσεις 600 εκατ. ευρώ αναφέρει η Cosmote Ρουμανίας στα τρία χρόνια λειτουργίας που συμπλήρωσε πρόσφατα. Σε ειδική εκδήλωση που πραγματοποιήθηκε στο Βουκουρέστι για τη συμπλήρωση τριών ετών από την επανέναρξη των δραστηριοτήτων της, η διοίκηση της επι
Αισιοδοξία για την ανάπτυξη της ρουμανικής οικονομίας
Αισιόδοξοι για τη συνεχιζόμενη ανάπτυξη της ρουμανικής οικονομίας, η οποία στο πρώτο τρίμηνο κατέγραψε ρυθμό 8%, είναι ο υπουργός Οικονομικών της χώρας και οι συνεργάτες του που επισκέφθηκαν την Αθήνα στο πλαίσιο παρουσιάσεων σε ευρωπαϊκές πρωτεύουσες.
Interest rate increases affect real estate projects
Real estate projects in Romania are the most sensitive when it comes to interest rates increases, particularly the office segment, which relies on the rent flow, according to Rasvan Radu, CEO of UniCredit Tiriac.
New hotels scheduled to open this year
This year will see over 16 new hotels open on the market, most of which belong to chains already established in Romania, such as Ramada, Golden Tulip and Continental.
Interest rate increases affect real estate projects
Real estate projects in Romania are the most sensitive when it comes to interest rates increases, particularly the office segment, which relies on the rent flow, according to Rasvan Radu, CEO of UniCredit Tiriac.
Niro Investment Group starts new projects in constructions
Niro Investment Group is getting ready to build together with the Chinese partners from Beijing Urban Construction Group (BUCG). Niro signed a long-term cooperation agreement with BUCG, and the new company will build Niro Towers and will assure the desig
Eurobank Properties: σύμβαση 9 ακινήτων
Οριστικοποιήθηκε η απόκτηση εννέα ακινήτων από την Eurobank Properties, συμφωνία που είχε ανακοινωθεί από το προηγούμενο καλοκαίρι, όταν είχε καταβληθεί και σχετική προκαταβολή 2,6 εκατ. ευρώ.
Ελληνικές τράπεζες με... «ξένα» δάνεια
Τα πιστωτικά ιδρύματα θα κάνουν περισσότερες χορηγήσεις, στα Βαλκάνια και την Αν. Ευρώπη, την επόμενη χρονιά.
Πειραιώς: νέα επένδυση real estate στη Ρουμανία
Tην εξαγορά της ρουμανικής εταιρείας ειδικού σκοπού (SPV) Intertrade S.L. έναντι 8 εκατ. ευρώ ολοκλήρωσε πρόσφατα η Trieris Real Estate Management Limited.
Controlling real estate growth
How private and public forces can best manage the chaotic boom in property development became the focus of a high-level seminar in Bucharest organised by The Diplomat - Bucharest, which brought together authorities and business to beat out some ideas.
Market overvalued says First Property
First Property Group, the Aim-listed asset manager, announced a rise in profits that it said justified its move out of the UK into eastern Europe. Financial Times
Romania thrives on European Union investment
Investment in Romanian property reached almost €500m (£349m) in the first half of this year, Jones Lang LaSalle research shows.
Μεγάλη αύξηση των ξένων επενδύσεων στη Ρουμανία
Σημαντική αύξηση παρουσιάζουν οι ξένες επενδύσεις στη Ρουμανία. Περίπου 8.000 επιχειρήσεις με ξένο κεφάλαιο ξεκίνησαν δραστηριότητα το πρώτο εξάμηνο του 2007 στη χώρα.
Norwegians buy 800 new apartments in Bucharest
Romania Ania Invest, a Norwegian investment fund, has acquired around 800 new apartments in five residential projects in Bucharest and around the city since the beginning of the year. The investors hope to achieve a 30-50% growth rate when the apartments
IMF: Real-estate prices will continue to grow in Romania
Foreign capital’s entry rate will not stagnate in Romania, so the real-estate prices in Romania will continue to grow, Juha Kahkonen, senior advisor within IMF’s Europe Department, has stated yesterday in Warsaw.
Οι τιμές πάνε πάνω στη Ρουμανία
Κάθε χρόνο, οι τιμές των οικοπέδων στη Ρουμανία, η οποία έχει ελκύσει πολλούς ξένους επενδυτές, ανεβαίνουν από 15% έως 20%. Η ένταξη στην ΕΕ δημιούργησε αίσθημα ασφάλειας, αυτό έφερε επενδυτές και θα έλθουν κι άλλοι, εφόσον αξιοποιηθούν τα ευρωπαϊκά κονδ
New hotels scheduled to open this year
This year will see over 16 new hotels open on the market, most of which belong to chains already established in Romania, such as Ramada, Golden Tulip and Continental.
Romania thrives on European Union investment
Investment in Romanian property reached almost €500m (£349m) in the first half of this year, Jones Lang LaSalle research shows.