LCSR Lewis Char. (See LSE:RPF)

RNS Number:3144B
Lewis Charles Romania Property Fund
02 August 2007


                                                                   2 August 2007


     Lewis Charles Romania Property Fund Limited lists on AIM after #27.4m
                                  fundraising


  * Investing in residential and commercial property primarily in and around
    Bucharest and other large Romanian cities
  * The Fund will be managed by Lewis Charles Securities Limited ("Manager"), 
    managers of the AIM quoted Lewis Charles Sofia Property Fund Limited
  * Trading to commence on 2 August, 2007

Lewis Charles Romania Property Fund Limited (the "Fund") today announces the
commencement of trading on AIM after a placing raised #25,556,967 (#27.4 million
before expenses). The Company has issued 19,576,405 placing shares at 140p per
ordinary share. Canaccord Adams Limited acted as the Fund's nominated advisor
and joint broker and Lewis Charles Securities Limited as lead distributor, joint
broker and manager.

The Fund is structured as a closed ended, Guernsey registered limited company
with a single class of ordinary shares to be admitted to AIM. The life of the
Fund is intended to be six years but may be extended by up to a year if such an
extension is necessary for an orderly realisation of the Fund's assets.

The Fund is in active negotiations to invest in various residential and
commercial developments and the initial focus will be on three properties, a
retail property development at Ploiesti, a residential development at Mogosoaia
and an office development at Otopeni. The Fund has entered into arrangements
with third party developers in relation to these properties which the Manager
expects to lead to the Fund acquiring, in the case of Ploiesti, a 100% interest,
and in the case of the remaining two properties, a 50% interest, within three
months from Admission. However, there is no guarantee that this will occur. The
contribution of the Fund to the acquisition costs for these sites is estimated
to be Euro33 million, representing an investment of approximately 86% of the net
proceeds of the Placing.


            
For further information please contact

Ed Portman, Leesa Peters, Conduit PR +44 (0) 207 429 6607 / +44 (0) 7733 363 501
Loraine Pinel, Mark Anderson         +44 20 7456 9100/ +44 (0) 7876 560 787
Mark Ashurst, Canaccord Adams        +44 20 7050 6500


            
FURTHER INFORMATION


THE DIRECTORS

The Directors, all of whom are non-executive and independent of the Manager are;


Richard Other Prickett FCA, age 55 (Non-executive Chairman): Mr Prickett is
chief executive and finance director of Landore Resources Limited, Asian Growth
Properties Limited; City Natural Resources High Yield Trust Plc; The Capital Pub
Company Plc; and Patagonia Gold Plc. Richard is a chartered accountant and
qualified with Coopers and Lybrand in 1973.


George Patrick Francis Inge FRICS, age 65: George trained as a chartered
surveyor and spent his early days at Savills as a land agent, eventually
becoming a partner. He was responsible for the change of Savills from
partnership to public company status. George became the first Chairman of
Savills plc in 1985 and retired as Chairman in 1995. He has held numerous
directorships and was a non-executive director of Westbury plc from 1995 to
2003. George was non-executive chairman of Severn Trent Property Plc from 1995
to 2006.


Paul Martin Duquemin, age 42: Paul is the Managing Director of Bachmann Fund
Administration Limited. Prior to joining Bachmann in 2005, Paul had been a
director of BISYS Fund Services (Guernsey) Limited. He has over 18 years'
experience in offshore finance, mostly in fund administration with Rothschild
Asset Management between 1990 and 1999 and BISYS Fund Services between 1999 and
2004. He also holds a number of directorships of offshore equity funds, property
funds and management companies.


Clive Norman Simon FCA, age 61: Clive is the chairman of Bachmann Fund
Administration Limited and a director of The Bachmann Group Limited. Before
joining the Bachmann group of companies in 1998, he was a senior partner with
Coopers and Lybrand (now PricewaterhouseCoopers), working in London, Africa and
the Channel Islands. He is also a director of Lewis Charles Sofia Fund Limited.
His business background is predominantly in the financial services sector. Clive
is a Guernsey resident.


Flavius Antonia Baias PhD, age 46: Flavius is an associate professor of the Law
Faculty (University of Bucharest). Appointed to his current Chair in 1991,
Flavius teaches land law and general theory of contracts. He was appointed
Deputy Minister of Justice in 1998, a position he held until December 2000.
Flavius was one of the founding partners of David and Baias, a top 10 law firm
in Romania established in association with PricewaterhouseCoopers in 2002. He
headed up the real estate and litigation department, but retired from the firm
in 2006. Flavius is the Editorial Director of C.H. Beck Publishing House, the
largest legal publishers in Romania.


THE MANAGER

The Fund will be managed by Lewis Charles Securities, a FSA regulated fund
management company which is a member of the London Stock Exchange and which is
also the manager of AIM listed Lewis Charles Sofia Property Fund which raised
approximately Euro52 million at 80 pence per share in September 2005 to invest in
property in Bulgaria and the mid market closing share price on 29 June 2007 was
99 pence.


The key executives of the Manager are:


Loraine Pinel: Loraine has been managing funds since graduating from the
Sorbonne in 1976. In 1977 she joined L'Abeille (Groupe Victoire) in Paris as a
fixed income fund manager. Loraine then moved to the Canadian insurance company,
Manufacturers Life Insurance, where she spent 15 years managing their global
fixed income funds. Loraine also ran their European equity portfolios and was a
Director of MIIM UK. Loraine moved to Royal Bank of Canada in 1997 where she
headed up the Private Client Department in London and was a Director of both
RBCIM UK and RBCIM USA until moving to Theodoor Gilissen at the end of 2001 to
head up the hedge fund/-private client team. Loraine moved to the Manager in
September 2004. Loraine was also founder director of the Black Sea Investment
Trust, a private Bulgarian company which invests in Bulgarian property.


Mark Anderson: Mark has a Law degree from Oxford University and spent several
years as a professional officer in the British Army's Royal Armoured Corps. He
joined the Royal Bank of Canada's investment management team in London in early
1996, and during the subsequent five years managed large private client
portfolios in several different base currencies and jurisdictions. Mark moved to
Theodoor Gilissen at the end of 2001 with Loraine Pinel in order to develop the
bank's London-based international investment management and hedge fund advisory
business. Mark is also a graduate of the Canadian Forces Command and Staff
College. Mark moved to the Manager in September 2004.


Peter Yallup: Peter began his career as a lecturer in Finance and Accounting at
Manchester Business School. He was then appointed as Senior Fixed Income Analyst
at Shearson Lehman Brothers, starting a period of sixteen years in the London
Eurobond market in research, sales and origination roles. Most recently Peter
spent five years at Shinkin International where he initiated the origination of
Yen denominated structured medium-term notes which were sold to the Shinkin
(mutual savings) banks in Japan. He joined Lewis Charles Securities Limited in
May 2005. Peter has BSc and MSc degrees in Management Science and a PhD in
Finance from Manchester University.


Stavros Loizou: Stavros has been CEO of Lewis Charles Securities since September
2000. Having graduated from City University in Banking & International Finance
in 1987 Stavros trained in New York with DLJ before joining DLJ in London. He
joined Fuji Bank (London) in 1989 where he remained for 11 years. During his
time there he became Head of the Strategic Trading Group. He left to set up the
Manager in 2000 where he is now CEO. Stavros has numerous years' experience in
trading proprietary positions and hedge funds and has been a regular guest on
Reuters and Bloomberg Television analysing the financial markets.


THE INITIAL PORTFOLIO

The Group has entered into the below agreements;


* Land at Ploiesti

The Group has entered into a preliminary share sale and purchase agreement for
the purchase of 100% of the shares in a Romanian company called SC Retail Park
Magnolia SRL ("Magnolia") for a purchase price of Euro6.7 million. Magnolia will
have the right to acquire land at Ploiesti for Euro6.3 million payable by 30
September 2007 resulting in a total acquisition cost for the Group of Euro13.0
million.


The parties have agreed that by 6 August 2007 they will enter into a final share
sale purchase agreement and a development agreement pursuant to which Westhill
will develop the site.


This land is 40km from Bucharest airport and on the main access route between
Bucharest and the north, comprising approximately 100,000 square metres. The
Company intends to build a 81,000 square metre shopping centre with total
potential capacity of 151,000 square metres to meet growing demand for
out-of-town retail outlets. The project will be over three to four years.
Although there is no guarantee that it will be achieved, the Projected IRR is
greater than 37%.


* Land at Mogosoaia

The Group has entered into a presale and purchase agreement for the purchase of
50% of the shares in a Romanian company called SC Gold Development SPV SRL which
has the right to acquire land at Mogosoaia for a purchase price of Euro13.0
million.


This land is an old chicken farm on the outskirts of Bucharest comprising
approximately 53,000 square metres for development into 1,600 residential
apartments plus associated leisure and retail units. The project will be phased
over four years. Although there is no guarantee that it will be achieved, the
Projected IRR is greater than 41%.


The parties have agreed that they will enter into a final sale and purchase
agreement upon satisfaction of certain conditions including admission of the
Company to AIM and obtaining the approval of the urban zonal plan (PUZ) for the
land.


* Land at Otopeni

The Group has entered into a put option agreement with Lazybush Developments
pursuant to which Lazybush Developments can require the Group at any time
between 1 September 2007 and 30 September 2007 to acquire 50% of the shares in a
Romanian company called SC Danubius Expert SRL which owns land at Otopeni for a
purchase price of approximately Euro2.15 million. In addition, the Group will take
an assignment of 50% of a loan of approximately Euro7 million made by an affiliate
of the seller. There is no guarantee that the put option will be exercised by
Lazybush Developments.


This land is adjacent to the Bucharest airport off the main highway comprising
approximately 26,400 square metres for development into eight office blocks. The
project will be phased over five years and six months. Although there is no
guarantee that it will be achieved the Projected IRR is greater than 28%.


INVESTMENT OPPORTUNITY

Romania was declared "the most attractive destination for investments in South
East Europe" by Ernst & Young in their publication 'Southeast Europe
Attractiveness Survey 2007'. The Directors and the Manager believe that
residential and commercial property in Romania is an attractive proposition
because of the expected increase of inward investment that is likely to result
from the liberalisation of the economy following Romania's accession to the EU,
which took place on 1 January 2007. The Directors believe Romanian economic
prospects are favourable in the short to medium term, and that the country will
continue to experience an influx of capital from returning and expatriate
professionals and tourists. The Romanian economy is growing from a low base
relative to the economies of the EU15.

The Directors and Manager believe that there are a number of other factors
favourable to Romania, which include:

* rising levels of FDI into Romania;

* ongoing upgrading of Romanian infrastructure aided by EU financing;

* the underdevelopment of real estate across Romania with opportunities for both
  new builds and regeneration work;

* low cost of labour compared to Western Europe;

* geographic location of Romania and the development opportunities along the
  Trans-National Pan-European Transport Corridors which are the major road links
  to northern Europe;

* initial cost of land (with planning permission) is typically only 15% to 20%
  of total costs.


Residential

The Directors believe that demand for residential property in Bucharest during
the next eight to ten years may be as high as 1.0 million units (flats or
houses). Within the whole of Romania, 20,730 new residential units were
completed during 2006 of which approximately 14% were in the Bucharest area.
There is little unemployment in Bucharest and the population is growing. The
plan for the future metropolitan area of Bucharest was published by the
Bucharest municipal administration in 2006, based on the assumption that the
population of the city will have grown from the present level of 2.2 million
inhabitants to 5.0 million by 2015.


Whilst there is a limited supply of high quality middle-class housing in
Bucharest, partly as a result of there being few experienced developers, demand
is increasing principally due to the increasing availability of mortgage
financing, changing population demographics, increasing purchasing power of
local residents and increasing FDI in Romania.


In relation to areas outside Bucharest, whilst there is limited available
information, the Directors and the Manager believe that there is an excess of
demand over supply and that there are likely to be opportunities to make
investments in the residential market outside Bucharest.


Commercial

The commercial sector in Bucharest is continuing to grow and although a number
of new developments have been announced (such as City Gate, Baneasa Business &
Technology Park and South Park) the Directors believe that there remains a
shortage of supply in key locations.


There is increasing evidence of yield compression coupled with strong investor
interest following Romania's accession to the EU. To achieve maximum value, the
Directors believe that investors need to become involved earlier in the
development process and develop projects themselves, or contract at the
development stage to acquire at a competitive yield. Investment property that is
currently available tends to have short leases and will become dated quickly as
new supply comes on to the market in the next two years. Buildings on the
European model, with large open floor areas, high technical specifications and
generous parking are still hard to find and are much in demand.


Bucharest is also starting to see a rise in demand from international tenants
with stronger covenants, for example, Microsoft has announced that it is to
lease a large office area and the Directors anticipate that there will be
similar demand from other support services and businesses. Romania is now
considered a country with a skilled labour force, particularly in technology, IT
and engineering. As infrastructure develops and political stability is
maintained, the Directors believe that more companies will focus on Romania's
skill set and the region will become more desirable. As a sign of the market
developing, 2006 saw a number of speculative projects commencing (compared with
2005, where developments had the majority of their tenants secured between
twelve and eighteen months before delivery of the completed project).


With current low vacancy rates of commercial premises, retail rents and prices
in Bucharest increased on average by 25% between 2005 and 2006. The Directors
believe that following the entrance into Romania (particularly Bucharest) of
major European retailers such as Carrefour, Lidl and Debenhams, it is likely
that retail rents and prices will continue to increase.


In relation to areas outside Bucharest, whilst there is limited available
information, the Directors believe that there is an excess of demand over supply
and that there are likely to be opportunities to make investments in the
commercial sector outside Bucharest.



                      This information is provided by RNS
            The company news service from the London Stock Exchange

END
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