Conclusion of the share purchase agreements aimed at the acquisition
of the German residential portfolio from LFH Portfolio Acquico S.À R.L.
and Peach Property Group AG and delayed disclosure of inside information
on the approval of this acquisition.
The Management Board of Globe Trade Centre S.A. (the “Company” or “GTC”)
hereby announces that on 15 November 2024 the Company entered into a
series of share purchase agreements with, inter alia, Peach Property
Group AG and LFH Portfolio Acquico S.À R.L., as the sellers, leading to
the acquisition of the portfolio of residential assets in Germany (the
“Portfolio”) currently held by Peach Property Group AG (the
“Transaction”). The closing of the Transaction is conditional upon the
fulfillment of a number of conditions precedent specified in the
Transaction documentation.
The envisaged Transaction assumes that the Company will indirectly
acquire:
(i) from Peach Property Group AG 89.9% of the limited liability
partnerships: Kaiserslautern I GmbH & Co. KG (or its legal successor)
and Kaiserslautern II GmbH & Co. KG (or its legal successor) (the
“Portfolio Partnerships”), and
(ii) from LFH Portfolio Acquico S.À R.L., and from ZNL Investment S.À
R.L., as a result of a series of transactions, up to 89.9% of the
limited liability companies: Portfolio Kaiserslautern III GmbH,
Portfolio KL Betzenberg IV GmbH, Portfolio KL Betzenberg V GmbH,
Portfolio Kaiserslautern VI GmbH, Portfolio Heidenheim I GmbH, Portfolio
Kaiserslautern VII GmbH and Portfolio Helmstedt GmbH (the “Portfolio
Companies”).
at an adjusted property value of approximately EUR 448 million based on
100% ownership of the Portfolio.
As the first tranche, the Company, indirectly through its subsidiary,
GTC Paula S.À R.L., will acquire 89.9% of the shares in the Portfolio
Partnerships and 79.8% of the shares in the Portfolio Companies for a
total consideration comprising EUR 167 million in cash and the
Participating Notes with a total nominal value of approximately EUR 42
million (as described in letter C (Description of the Participating
Notes)), subject to adjustments. Peach Property Group AG will retain a
10.1% stake in the Portfolio Partnerships and the Portfolio Companies,
while co-investors, ZNL Investment S.À R.L. and LFH Portfolio Acquico
S.À R.L., will retain remaining specified shares. The Company will also
be granted an option to purchase additional 10.1% of the Portfolio
Companies at an option price determined in accordance with the formula
applicable for the calculation of the consideration amount (as
adjusted), provided that no reinvestments will be made. Consequently,
the Company will acquire 89.9% of the Portfolio Partnerships and up to
89.9% of the Portfolio Companies.
A. Portfolio overview
The Portfolio is centred around three cities in Germany: Kaiserslautern,
Helmstedt, and Heidenheim. It has a residential share of close to 100%
and an occupancy rate of around 87.4%. In total, the portfolio comprises
5,165 residential, 47 commercial units, 71 other units, and 2,108
parking units with a total lettable area of 324,167 sqm. The main asset
classes by year of construction are properties built in 1950-1969 and
newer properties built in 1970-1984.
B. Funding structure
Under the agreed terms and conditions, the Transaction will be funded
through:
1. assumption of existing senior bank loans of approximately EUR 185.4
million currently provided to certain project companies by multiple
banks including: DZ Hyp AG, Landesbank Baden-Württemberg, Sparkasse
Kaiserslautern, and Volksbank BRAWO eG, loans to be either transferred
into the new structure or refinanced by a similar loan provided by
Landesbank Baden-Württemberg or DZ Hyp AG;
2. Participating Notes, which will be offered or transferred to LFH
Portfolio Acquico S.À R.L., as described in letter C (Description of the
Participating Notes) below.
3. the funding gap between the equity and senior bank loans will be
filled through senior secured debt raised by GTC Group, further
described in letter D (Debt financing) below.
C. Description of the Participating Notes
The Company is planning to issue participating bonds under the Polish
Act on Bonds, with a total nominal value of approximately EUR 42 million
(the “Participating Notes”). The Participating Notes will be offered or
transferred to LFH Portfolio Acquico S.À R.L. The Participating Notes
will be unsecured, subordinated to all other liabilities due to the
creditors of GTC and will have a final effective maturity beyond that of
all of GTC’s debt (i.e. 2044).
Each year, if the General Meeting adopts a resolution on distribution of
profit and payment of dividend (the “Resolution”), the Participating
Notes will entitle the noteholders to participate in the Company’s
profit. If the Resolution declares that no dividend is due, no payment
will accrue or be payable for the Participating Notes. If the Resolution
declares that the dividend is to be paid, the amount of the payment
payable in respect of the Participating Notes will correspond to the
amount of the dividend payable in respect of the number of shares which
will be determined upon the issuance of the Participating Notes as (i)
the aggregate nominal value of the Participating Notes; divided by (ii)
the average GTC share price on the regulated market as at the date
designated prior to the issue date of the Participating Notes.
Under the terms and conditions of the Participating Notes, the Company
may exercise its right to early redemption if the General Meeting adopts
a resolution to increase the Company’s share capital (which would
require the exclusion of pre-emptive rights of the Company’s
shareholders). In this case, the Participating Notes will be redeemed
upon the subscription of warrants. The total number of shares that the
warrants entitle holders to will equal the number of GTC’s shares
calculated based on the payments payable in respect of the Participating
Notes as provided above.
D. Debt financing
To provide further financing for the Transaction, the Company has
secured a five-year EUR 190 million loan (the “Loan”), to be provided by
private investment firms (the “Lenders”).
The Loan will be entered by an indirect subsidiary of the Company, GTC
Paula S.À R.L. (the “Borrower”), and will be guaranteed by the Company,
GTC Holding S.À R.L., the Borrower, and selected direct and indirect
subsidiaries of the Borrower, to the extent legally permissible.
The Loan will be further secured by encumbrances on various collateral
assets, including: (i) a pledge over the shares in GTC Holding S.À R.L.,
(ii) a pledge over the shares in the Borrower, (iii) a pledge over all
accounts of the Borrower and the receivables from its subsidiaries, (iv)
a pledge over financial instruments representing the rights to the
Kildare project, (v) share pledges over wholly-owned direct subsidiaries
of the Borrower, newly established under Luxembourg law, are included,
specifically those subsidiaries holding 100% ownership of the entities
owning real estate assets referred to as the “Ericsson HQ” office
building and the “evosoft HQ” office building (both located in Hungary,
held by GTC Univerzum Projekt Kft.), the “Pillar” office building
(located in Hungary, held by Kompakt Land Ingatlanhasznosító Kft.) and
the “Ada Mall” shopping mall (located in Serbia, held by Commercial
Development d.o.o. Beograd), and (vi) pledges over wholly-owned direct
subsidiaries of the Borrower, newly established under the laws of the
Grand Duchy of Luxembourg, holding direct shares in the Portfolio
Companies and the Portfolio Partnerships.
The Loan will be ranked at least pari passu with all other current and
future unsecured and unsubordinated obligations of the Borrower.
E. Strategic rationale for the Transaction
The Management Board of GTC strongly believes that the Transaction has
sound strategic rationale for GTC and is aligned with the Company’s
long-term strategy given:
• expand into higher rated European real estate markets with Germany in
particular being a AAA-rated country known for its economic stability
and strong demand for residential properties. Post-Transaction 19% of
GTC Group combined GAV and 30% of its rental area to be located in
German;
• strong German market fundamentals such as an increasing housing
deficit, low vacancy rates, and decreasing interest rates lead to a
favorable outlook;
• quickly diversify GTC Group’s asset base by acquiring 5,165
residential units, i.e. about one fifth of GTC Group’s portfolio to be
residential post-Transaction;
• opportunity for value creation by enhancing value through (i) the
management and modernization of the properties and (ii) the disposal of
a part of the Portfolio at improved prices;
• a comprehensive ESG strategy, using a combination of sophisticated
hardware such as heat pumps and AI software components to create
sustainable living space further enhancing the Portfolio value;
• leveraging management’s residential expertise and combine it with a
select team from Peach Property Group AG to create a local taskforce to
manage the Portfolio; and
• improved creditworthiness, with a more balanced maturity profile and a
strong balance sheet benefitting from funding of the Transaction with
equity-like instruments.
F. Delayed disclosure of inside information
On 8 November 2024, the Transaction was approved by the Company’s
Supervisory Board in accordance with article 10 section 1 letter c) of
the articles of association of the Company.
On 8 November 2024, the Company decided to delay the disclosure of the
inside information on the approval of the Transaction by the Supervisory
Board on the basis of Article 17 (4) of the Regulation of the European
Parliament and of the Council (EU) No. 596/2014 on market abuse (market
abuse regulation) and repealing Directive 2003/6/EC of the European
Parliament and of the Council, and Commission Directives 2003/124/EC,
2003/125/EC and 2004/72/EC (inside information) due to the fulfilment of
the conditions justifying such delay, including the likeliness that the
disclosure of such information would prejudice the legitimate interests
of the Company since such disclosure was likely to negatively affect the
course and outcome of the negotiations of the series of transactions
aimed at the acquisition of the Portfolio (described in more detail in
section A of this current report), and, consequently, the terms of the
Transaction.
Legal basis: Art. 17 (1) and (4) of the Regulation of the European
Parliament and of the Council (EU) No. 596/2014 on market abuse (market
abuse regulation) and repealing Directive 2003/6/EC of the European
Parliament and of the Council and Commission Directives 2003/124/EC,
2003/125/EC and 2004/72/EC (inside information).
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