TECLA FONDO UFFICI
PRELIOS SGR APPROVES HALF-YEAR REPORT AT 30 JUNE 2014
- TOTAL NAV EURO 185.5 MLN
- NAV EURO 286.84 PER UNIT
- 9.85% AVERAGE ANNUAL YIELD FROM PLACEMENT
IN THE CURRENT FRAMEWORK OF REFERENCE, ALTERNATIVE ACTIVITIES HAVE BEEN EVALUATED IN VIEW OF THE FUND EXPIRY AT 31 DECEMBER 2014
Milan, 30 July 2014 – The Board of Directors of Prelios SGR, held on today’s date, approved the half-year report at 30 June 2014 of Tecla Fondo Uffici, a listed real estate mutual fund.
During the first half of 2014 the Fund sold the residual portion of the property located in Ivrea, Corso Re Umberto 25, for a price equal to euro 1.6 million, with a capital loss of approximately euro 250,000 against market value.
In the same period of reference the Company continued the activities for the improvement of the assets under management and stipulated new lease contracts for a total of approximately 2,590 sq m. The contracts stipulated in the first half of 2014 include the re-negotiations with two leading companies operating in the IT industry, which currently are the tenants of the property of Rome, via del Serafico 200 and the property of Turin, via Bertola 34, respectively.
The Fund’s distributable result in the first half of 2014 was negative for euro 13.6 million, net of unrealized capital gains and losses. Consequently, no proceeds will be paid out.
At 30 June 2014 NAV is equal to euro 286.84 per unit (total NAV is equal to euro 185.5 million), against euro 317.9 at 31 December 2013 (total NAV equal to euro 205.5 million). At 30 June 2014 the stock price per unit was equal to euro 169.6 euro against euro 158.8 at 31 December 2013. The theoretical average annual IRR from placement to 30 June 2014 is equal to 9.85%.
In consideration of the persistent difficult market scenario characterized by a reduced supply absorption capacity , the approaching expiry date of the Fund, currently coinciding with 31 December 2014, and the current framework of reference, Prelios SGR is evaluating alternative options, including the extension of the Fund term – should the relevant rule be issued in due time – and an extraordinary transaction in the interest of all unitholders, in particular unitholders other than the majority unitholder, that holds 87.77% of the outstanding Tecla Fund units().
In relation to the aforementioned extraordinary transaction, Prelios SGR started preliminary activities to verify the possible option of the spin-off of Tecla Fund, that would envisage, in summary, keeping in Tecla Fund the assets that are more easily expected to be disposed within the Fund’s expiry date at 31 December 2014, the transfer to a newly established, reserved and unlisted real estate beneficiary fund of those Fund assets that are less liquid in the current market framework within the Fund’s expiry and finally the transfer of the units of the beneficiary fund to the sole majority unitholder in exchange of its units of Tecla Fund (which would then be concurrently cancelled) which would then remain held by the other unitholders.
The spin-off would consequently not be on a pro rata basis and its implementation, beside being subject to the authorization by Bank of Italy and to the consent by the lending banks, would also be subject to the consent of Tecla Fund majority unitholder. Moreover, Prelios SGR submitted a questioning to the Inland Revenue Office in July 2014 to check the spin-off tax regime given the innovative nature of the proposed transaction.
Prelios SGR submitted the spin-off to the preliminary review of the lending banks and to the majority unitholder of Tecla Fund that have not raised any objection for the time being. The Fund’s majority unitholder reserves final decisions to be made when the regulatory framework of reference concerning the extension is clarified.
It should be noted that on 25 July 2014 the Senate of the Italian Republic approved a bill submitted by the government regarding the conversion into law, with amendments, of the so-called “Competition Decree” (Legislative Decree No. 91 of 24 June 2014, published in the Official Gazette No. 144 of 24 June 2014); such bill, which is still subject to the approval by the Chamber of Deputies and to the completion of the relevant parliamentary procedure, contains an extraordinary provision aimed at providing the possibility of extending the duration of listed real estate funds. Subject to possible changes and additional amendments, should the procedure be completed by next 24 August 2014 (Competition Decree conversion term) with the publication in the Official Gazette, the conversion law would introduce the aforementioned provision in the regulatory framework of reference with the possibility for assets management companies to submit to the Unitholders’ Meetings of the listed real estate funds an extension, limited in time, of the expiry date of the funds in order to facilitate their liquidation.
Based on the foregoing, a solution geared to allowing an ordered liquidation of the Fund seems to be reasonably expectable. However, should the aforementioned legislative procedure in the matter of extension of the expiry date or the Spin-Off assumption above described be not confirmed or any positive solution be not identified in the coming months, such circumstance would be a significant uncertainty about the capacity of Tecla Fund to make an ordered disposition of the real estate assets in an economic-financial balance situation.
According to this situation, the Board of Directors reasonably expects that the alternatives reported above may allow to deal with the criticalities described above, including the definition of the negotiation of the expired loan with the lending banks and, consequently, drafted the Report at 30 June 2014 by reasonably assuming that it is not necessary to make a forced sale of the entire real estate asset portfolio of Tecla Fund by 31 December 2014.
The half-year report and the assets estimate reports drafted by the independent appraisers will be made available at the offices of Prelios SGR, Borsa Italiana, the Depositary Bank State Street Bank S.p.A. and on the website at www.fondotecla.com.
(1) % value relating to the units held at the Unitholders’ Meeting of 5 March 2014