This article is from the Australian Property Journal archive
Rubicon Europe Trust Group has launched Rubicon Finance Europe which will provide finance to private and corporate owners of commercial real estate in Europe including the UK.
Rubicon Finance Europe will leverage the combined strengths of REU’s established real estate platform and Rubicon’s expertise in the provision of real estate finance. The deal allows Rubicon to break into France and England.
REU will acquire five high quality European commercial real estate loan asset sat par value for €207 million ($A346 million) to launch Rubicon Finance Europe and is funding the acquisition with the issue of new equity of approximately $A245.5 million and debt.
Keys to the transaction portfolio are five individual loan assets, secured against 402 underlying properties valued at over €3.8 billion ($A6 billion) diversified across four countries in Europe.
They are weighted average coupon and yield to maturity of 9.3% representing a margin of 4.5% to base lending rates — weighted average first and last dollar loan-to-value ratio range of 81.4% to 89.1% at the date of loan establishment.
The weighted average duration of between approximately two and four years depending on exercise of extension options
Major financial benefits are expected to include an upgrade in forecast distribution from 9.5 cents to 10.1 cents for the 12 months to December 2007, reflecting only nine months of financial benefit – accretion of 8.1% on an annualised basis.
It will also decrease in overall consolidated gearing from 60.3% to 52.0% which increases balance sheet capacity to $A250 million and increase in market capitalisation by 84% to approximately $A539 million which will enhance both liquidity and presence of REU stock on the ASX.
REU will issue approximately 237.1 million new Stapled Units to raise approximately $A245.5 million by way of a 2 for 3 non-renounceable pro rata rights offer of approximately 172.4 million units at a fixed price of $1.03 per new Stapled Unit to existing eligible Investors; and
An institutional placement of approximately 64.7 million Stapled Units at a price to be determined by way of a bookbuild.
The rights offer will be open to all eligible investors who are on the REU register on 22 February
2007.
Credit Suisse (Australia) Limited and UBS AG Australia Branch have been appointed as Joint Lead Managers and have fully underwritten the rights offer and institutional placement.
Managing director of Rubicon, Gordon Fell said the transaction clearly demonstrates Rubicon’s ability to enhance returns to investors while reducing risk.
He said the transaction delivers improved scale, diversification and income security for REU while significantly increasing 2007 distributions to Investors by over 10% on an annualised basis from that promised at the time of the IPO”.
“REU’s Investors will immediately benefit from increased distributions of 10.1 cents per unit. This represents a yield of 9.8% on the $1.03 price at which we are offering new units to existing Investors.”
Meanwhile, the trust’s has reported a net operating income of $49.3 million for the six months to December 31, 2006 – 158% higher than the 2005 PDS forecast of $19.1 million.
The trust’s net profit adjusted was $23.95 million, slightly higher than the PDS forecast of $23.54 million.
Rubicon has declared a distribution of 9 cents per unit for the period, meeting its PDS forecast.
Australian Property Journal
