Storm Real Estate ASA – Discloses 10% holding in Eastern Property Holdings Ltd
April 14, 2011
STOCKHOLM–(BUSINESS WIRE)–Storm Real Estate ASA today announced that through its Subsidiary Tiberton Yard Ltd. it controls 427,376 shares corresponding to 10% of the outstanding shares in Eastern Property Holdings Ltd. Storm Real Estate ASA has built up the stake through a number of smaller share acquisitions in the company during the past 6 months as part of the cash management strategy in Russian real estate companies. The total ownership percentage has been calculated based on an outstanding share capital in Eastern Property Holdings Ltd of 4,262,613 shares.
“says Morten E. Astrup, CIO of Storm Capital Management Ltd.”
Eastern Property Holdings Ltd is a SIX Swiss Exchange listed real estate development and investment company focusing on Russia. The company holds interests in office, residential, retail and parking properties and developments, principally in Moscow and St. Petersburg. Eastern Property Holdings Ltd is managed by Valartis International Ltd., a wholly owned subsidiary of Valartis Group AG. Valartis Group AG is also a significant shareholder with control of approximately 40.5% of the outstanding shares.
In 2010, Eastern Property Holdings Ltd reported a net profit USD12.8 million corresponding to earnings per share of USD 3.00. The investment properties had a value of USD 370.2 million and bank debt totalled USD 88.9 million. Total shareholders’ equity equalled USD 343.3 million, which corresponds to net asset value per share of USD 80.54. The share traded at USD 36 on April 13th corresponding to a discount to NAV of 55%. The majority of the NAV comprises of developed office buildings in Moscow and St. Petersburg. In February 2011, Eastern Property Holdings Ltd announced that it had entered into an agreement to create a real estate joint venture on the basis of two of its prime Moscow properties, Geneva House and Berlin House. The investment group has agreed to pay a significant prepayment. Eastern Property Holdings Ltd is a publicly traded at the Swiss Stock Exchange (“SIX”) under the ticker EPH.
Storm Real Estate ASA’s investment in Eastern Property Holdings Ltd is consistent with Storm Real Estate ASA’s strategy and stated investment program of investing in attractive real estate stocks and bonds with Russia exposure, alongside evaluating potential acquisitions of suitable buildings. This investment gives Storm Real Estate ASA further exposure to the Russian real estate market at an attractive price compared to buying properties outright. Storm Real Estate ASA’s strategy differ from Eastern Property Holdings Ltd in the sense that as Storm Real Estate focus on shares and bonds in real estate companies as well as developed properties, Eastern Property Holdings Ltd has focused on a larger part of the value chain in real estate.
“We are therefore not competing to buy the same properties. Storm Real Estate ASA believes the underlying developed office properties alone defend today’s valuation of Eastern Property Holdings Ltd”, ” says Morten E. Astrup, CIO of Storm Capital Management Ltd. “We believe Storm Real Estate ASA can contribute to creating shareholder value for all the shareholders in Eastern Property Holdings Ltd.
We aim to obtain our goals through a good dialogue with Eastern Property Holdings Ltd and the shareholders of Eastern Property Holdings Ltd. In our opinion it is of importance that Eastern Property Holdings Ltd introduces increased transparency, improved corporate governance and investor relations. We will call for an EGM through a separate press release.”