MAX Max Prop

 

TIDMMAX 
 
RNS Number : 8852W 
Max Property Group PLC 
05 August 2009 
 

Max Property Group Plc 
 
 
 
 
Portfolio Acquisition 
 
 
The board of Max Property Group PLC ("MPG") announces today that it has 
exchanged contracts to acquire a portfolio of principally light industrial 
property from Ernst & Young acting as Receivers for the Industrious Group for a 
consideration of GBP232.1m or GBP245.4m including stamp duty and acquisition 
costs. 
 
 
At the time of its IPO, the board made clear that MPG's investment strategy was 
to exploit the current instability in the UK real estate market through 
opportunist acquisition, active asset management and judicious use of 
non-recourse borrowings to enhance shareholder returns at a time in the cycle 
with significant opportunities. This first transaction achieves all of these 
objectives, whilst diversifying specific risk across over 800 tenants. 
 
 
The portfolio comprises some 7.6m sq ft of which 1.5m sq ft is currently or 
imminently vacant with over 800 tenants on 86 mainly freehold industrial estates 
throughout the UK.  46% of the portfolio by value is in London and the South 
East. The portfolio produces a gross rental income of c. GBP29.6m per annum 
reducing to GBP22.7m after allowing for empty rates, other non recoverable 
expenditure and management costs. The estimated rental value of the portfolio if 
fully let is in the order of GBP32.5m per annum. 
 
 
The headline running yield on purchase price including stamp and transaction 
costs is 12.1% and the net yield is 10.3% after empty rates and other void 
property costs; however the board is firmly focused on the rent net of all costs 
including management costs of some GBP2.5m p.a.. The board believes it has the 
expertise to manage the portfolio to achieve a reduction in voids and associated 
costs which will boost what is already an attractive cash on cash return for our 
shareholders. 
 
 
The acquisition will be part financed with a non recourse debt facility of up to 
GBP128.3m on a five year term, arranged by Eurohypo AG, with the balance of the 
consideration met from the Group's cash reserves.  MPG raised GBP211m net of 
expenses through its IPO in May 2009.  Completion of the acquisition is expected 
to occur by 7th October, 2009 following the fulfilment of certain conditions 
relating to the receivership. 
 
 
MPG was advised by Franc Warwick and Ernst & Young by King Sturge. 
 
 
Commenting on the transaction Aubrey Adams, Chairman of MPG stated: 
 
"At approximately GBP32.50 per square foot capital value, representing almost 
half replacement cost, at the same time as delivering significant cash on cash 
returns, this exciting transaction affords us many opportunities to maintain 
rent in the short term and then materially increase our net income through 
intensive hands on management. As a result of the receivership the portfolio has 
suffered considerably from under-investment for some time now.  We must focus 
firstly on stabilizing rents and then increasing them in the medium term, which 
will afford us many opportunities to significantly enhance capital values over 
the next three to five years." 
 
 
 
 
5 August 2009 
 
 
ENQUIRIES: 
 
 
+----------------------------------------------+----------------------------+ 
| Prestbury Investments LLP                    | Tel: 020 7647 7647         | 
+----------------------------------------------+----------------------------+ 
| Nick Leslau                                  |                            | 
+----------------------------------------------+----------------------------+ 
| Mike Brown                                   |                            | 
+----------------------------------------------+----------------------------+ 
|                                              |                            | 
+----------------------------------------------+----------------------------+ 
| College Hill                                 | Tel: 020 7457 2020         | 
+----------------------------------------------+----------------------------+ 
| Alex Sandberg                                |                            | 
+----------------------------------------------+----------------------------+ 
|                                              |                            | 
+----------------------------------------------+----------------------------+ 
| Morgan Stanley (NOMAD)                       | Tel: 020 7425 8000         | 
+----------------------------------------------+----------------------------+ 
| Jonathan Lane                                |                            | 
+----------------------------------------------+----------------------------+ 
| Nick White                                   |                            | 
+----------------------------------------------+----------------------------+ 
 
 
 
 
Editors' Notes 
 
 
Max Property Group Plc ("MPG") is a Jersey incorporated closed-ended real estate 
investment Company, with an experienced Board, chaired by Aubrey Adams, and 
externally managed by Prestbury Investments LLP, which is owned and managed by a 
team led by Nick Leslau and Mike Brown. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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