RNS Number:3773L
DEV Property Development PLC
09 January 2008
9 January 2008
Dev Property Development plc
(Dev or the Company)
Proposed Disposal of Interests in Two Development Projects
Dev Property Development plc (AIM: DPD), a company investing in Indian real
estate, today announces that it has sent a circular to shareholders convening an
extraordinary general meeting (EGM) on 25 January 2008. The purpose of the EGM
will be to seek shareholder consent for the disposal of Dev's interests in two
of its three development projects for a total minimum consideration of �114
million (the Minimum Consideration).
Highlights of the proposed transaction:
*Dev intends to dispose of its entire interest in two development
projects, the Jupiter Mills and Elphinstone Mills Projects (the Projects).
*The proposed transaction will be structured as a sale of Dev's entire 13
per cent. interest in each of the following project special purpose vehicles
(SPVs): Indiabulls Properties Private Limited and Indiabulls Real Estate
Company Private Limited.
*Dev's interests in the SPVs will be sold to wholly-owned subsidiaries of
Indiabulls Properties Investment Trust (IPIT), a Singapore-based investment
trust with the principal objective of investing in office space in India.
*IPIT intends to finance the acquisition of Dev's interests in the
Projects by offering units representing undivided interests in IPIT (Units)
through an international placement to investors and an offering to the
public of Singapore.
*Part of the consideration paid for the Dev's interests in the Projects
will be satisfied by IPIT issuing Units to the relevant subsidiaries of the
Company. The cash component of the consideration will constitute at least 20
per cent. of the total consideration received by the Company.
*The proposed transaction is currently expected to complete by 1 March
2008. Completion of the transaction will be subject to IPIT raising
sufficient funds to pay the cash component of the Minimum Consideration.
*The initial investment paid by the Company for its interests in the two
Projects was approximately �82.7 million. The Minimum Consideration payable
to the Company represents an average internal rate of return of 35 per cent.
on the initial investment (before the payment of the relevant performance
fees to the Investment Manager and deduction of expenses incurred by the
Company and assuming the transaction is completed on 1 March 2008).
These highlights should be read in conjunction with the full circular below.
Rishi Khosla, chairman of Dev Property Development PLC stated:
"At the time of IPO we announced that a possible strategy to maximise return on
investments might include the sale of the Company's interests in its development
projects. Today's announcement highlights our ability to implement this strategy
in order to create shareholder value and opens up promising opportunities for
future reinvestment".
Enquiries:
Anne Couper Woods
Company Secretary
Dev Property Development plc
Top Floor
14 Athol Street
Douglas
Isle of Man IM1 1JA
Jag Mundi / Nick Westlake
Numis Securities
The London Stock Exchange Building
10 Paternoster Square
EC4M 7LT
020 7260 1000
M:Communications:
Edward Orlebar
orlebar@mcomgroup.com
+44 20 7153 1523
Charlotte McMullen
mcmullen@mcomgroup.com
+44 20 7153 1549
Notes to Editors:
Jupiter Mills
Jupiter Mills, a site located between two business districts near central
Mumbai, is being developed by Indiabulls Properties Private Limited as an
integrated project with two components: a commercial element comprising an IT
park (which includes a retail space/mall) and a residential element which cover
a combined 11.1 acres; 9.7 acres making up the commercial component and the
residential component comprising of 1.4 acres. Indiabulls Properties Private
Limited is awaiting the final approval of its industrial park status from the
Government of India. Jupiter Mills has a planned total 1,433,000 sq ft of
lettable office space, 438,000 sq ft of lettable retail space, a residential
element comprising 119,000 sq ft of saleable area and 3,500 carparks to be
completed by 31 December 2008. At 27 December 2007, Jupiter Mills had entered
into letters of intent (LOIs) in respect of approximately 644,000 sq ft, 34 per
cent. of lettable area for Jupiter Mill when fully completed. The tenant profile
of Jupiter Mills is diverse and is expected to include banks, financial
institutions, large corporates and high end retailers. With regard to the
residential component of the business, all units in the residential building are
expected to be sold.
Elphinstone Mills
The Elphinstone Mills site which is being developed by Indiabulls Real Estate
Company Private Limited (IRECPL) is located on 7.8 acres in Lower Parel in close
proximity to Jupiter Mills.
Approval has been received from the Ministry of Commerce and Industry of the
Government of India to establish an industrial park and an approval from the
State of Maharashtra to establish an IT park at the project site in April 2006
and September 2006 respectively. IRECPL has made an application to the
Government of India for renewal of its approval for its industrial park status.
It is expected that Elphinstone Mills shall have a total of 1,536,000 sq ft of
lettable office space and 3,000 car parks to be completed post-listing of
Indiabulls Properties Investment Trust by 30 November 2008.
Indiabulls Properties Investment Trust (IPIT)
IPIT is a proposed Singapore-based business trust to be established with the
principal objectives of investing, either directly or indirectly, primarily in
income-producing office space in India; acquiring and developing primarily
office space in India with the intention of holding such properties upon
completion; and investing in real-estate related assets.
LETTER FROM THE CHAIRMAN OF DEV PROPERTY DEVELOPMENT PLC
DEV PROPERTY DEVELOPMENT PLC
(a company incorporated in the Isle of Man and registered with number 118630C)
Non-executive Directors:
Rishi Khosla (Chairman)
Alan Kingsley
Richard Marcus Melhuish
Ita McArdle
Atul Kumar Shukla
Tarun Tyagi
Registered Office:
Top Floor
14 Athol Street
Douglas
Isle of Man IM1 1JA
9 January 2008
To: Shareholders of Dev Property Development plc
Dear Shareholder
Proposed Disposal of Interests in Two Development Projects
Introduction
The Company announced today that it proposes to dispose of its interests in two
of its three development projects (the "Proposed Transaction"). As the Proposed
Transaction will result in the disposal of a significant portion of the
Company's current investment portfolio, pursuant to the AIM Rules for Companies
(the "AIM Rules"), the Proposed Transaction is conditional upon the consent of
the shareholders of the Company ("Shareholders") being given in a general
meeting. In addition, Shareholders' consent is being sought for a disposal of
all or part of the IPIT Units which the relevant subsidiaries of the Company
will receive as consideration in connection with the Proposed Transaction.
The purpose of this Circular is to provide Shareholders with information in
respect of the Proposed Transaction in accordance with the AIM Rules and to
convene the EGM to seek Shareholders' approval. Notice of the EGM is set out at
the end of this Circular.
Details of the Proposed Transaction
Disposal
The Company intends to dispose of its entire interest in the following two
development projects (the "Projects"):
(i) Jupiter Mills Project ("Jupiter Mills"); and
(ii) Elphinstone Mills Project ("Elphinstone Mills").
Further details of the Projects are set out in the section entitled "The
Projects" below.
The Proposed Transaction will be structured by way of a sale of the Company's
entire 13 per cent. interest in each of the following project special purpose
vehicles: Indiabulls Properties Private Limited ("IPPL") and Indiabulls Real
Estate Company Private Limited ("IRECPL") (together, the "SPVs"). IPPL holds the
Company's interest in Jupiter Mills and IRECPL holds the Company's interest in
Elphinstone Mills. Indiabulls Real Estate Limited ("IBREL") and/or its
subsidiaries (the "IBREL Group") hold a 40 per cent. interest in IPPL and IRECPL
and FIM Ltd. ("FIM") and/or its subsidiaries, (the "FIM Group") hold a 47 per
cent. interest in IPPL and IRECPL. It is proposed that the Company, the IBREL
Group's and the FIM Group's interests in the SPVs will be sold to wholly-owned
subsidiaries of Indiabulls Properties Investment Trust ("IPIT"). IPIT is a
proposed Singapore-based business trust to be established with the principal
objectives of investing, either directly or indirectly, primarily in
income-producing office space in India; acquiring and developing primarily
office space in India with the intention of holding such properties upon
completion; and investing in real-estate related assets in connection with the
foregoing.
In order to finance the acquisition of the SPVs, IPIT intends to offer IPIT
Units by way of an international placement to investors and an offering to the
public in Singapore (collectively, the "IPIT Offering"). In addition, part of
the consideration paid for the Company, the IBREL Group and the FIM Group's
interests in the two Projects will be satisfied by issuing IPIT Units to the
relevant subsidiaries of the Company, IBREL and FIM. IPIT has applied for
permission to list the IPIT Units on the Main Board of Singapore Exchange
Securities Trading Limited (the "SGX-ST") and sale of the interests in the SPVs
to IPIT will be conditional upon the successful completion of the IPIT Offering
and the listing of the IPIT Units on the SGX-ST. IBREL is the sponsor of the
IPIT Offering.
Consideration
The initial consideration paid by the Company on 5 February 2007 for its
interests in the two Projects was approximately �82.7 million (the "Initial
Investment"). The minimum gross consideration at which the Company will dispose
of its interests in the two Projects to IPIT and/or its direct and indirect
wholly-owned subsidiaries (the "IPIT Group") will be �114 million (the "Minimum
Consideration"). The Company, the IBREL Group and the FIM Group may offer
certain additional benefits to IPIT under the terms of the Proposed Transaction
including a waiver of rights to future dividends to be paid by IPIT, subsidies
or other incentives. In the event such benefits are offered to IPIT, the Minimum
Consideration shall be increased by an amount equal to the value attributed by
the board of Directors (the "Board") to such benefits. The decision to offer
such benefits will be at the Board's discretion. The IBREL Group and the FIM
Group also intend to sell their entire holdings in the SPVs to the IPIT Group on
terms no more favourable (including as to the benefits described above) than the
terms of the Company's sale of its interests in the SPVs (other than as
specifically described in this Circular).
The actual consideration received by the Company (the "Final Consideration")
will be established following a book building exercise for the IPIT Offering and
may be greater than the Minimum Consideration. The Final Consideration will be
satisfied through a combination of cash (the "Cash Consideration") and IPIT
Units (the "Unit Consideration"). For the purposes of calculating the Unit
Consideration, the IPIT Units will be valued at the price at which IPIT Units
will be offered to investors pursuant to the IPIT Offering. The Cash
Consideration payable to the Company will constitute at least 20 per cent. of
the Final Consideration and the Unit Consideration will not exceed 80 per cent.
of the Final Consideration. The proportion of Cash Consideration received by the
Company will not be less than the cash proportion received by either the IBREL
Group or by the FIM Group. However, the proportion of the total consideration to
be paid to the IBREL Group and/or the FIM Group in IPIT Units may be greater
than that received by the Company. The Unit Consideration will be subject to a
lock-up arrangement for a period of 12 months during which the Company's ability
to dispose of the IPIT Units will be restricted. For further details see
"Contractual Agreements - Lock-up of the IPIT Units held by the Company" below.
Following expiration of the First Lock-up Period and/or the Second Lock-up
Period (each as defined under "Contractual Agreements - Lock-up of the IPIT
Units held by the Company" below), the Company may continue to hold or dispose
of part or all of the IPIT Units received as Unit Consideration. Any decision to
deal in any IPIT Units will be made at the discretion of the independent members
of the Board.
In addition to approval of the Proposed Transaction, the Directors are seeking
Shareholders' consent for the disposal of all or part of the Unit Consideration
at a minimum price of not less than a 10 per cent. discount to the prior month's
average daily closing price of the IPIT Units at the time of such disposal (in
one or a series of transactions).
The total net asset value of the Company's interests in the SPVs, pursuant to
the unaudited financial statements of the Company dated 30 September 2007, is
�102.6 million. The Minimum Consideration represents a 11 per cent. premium to
the net asset value for the Company's interests in the SPVs as at 30 September
2007.
The value attributed to the two Projects as at 1 October 2007 by Knight Frank
(India) Private Limited ("Knight Frank") in their valuation report dated
1 November 2007 is �1,568.8 million. Based upon the Company's 13 per cent.
interest in each of the Projects, the value attributable to such interests is
�203.9 million. The Knight Frank valuation, however, does not take into account
taxation, net debt and cash, other assets, liabilities and factors such as
minority interest discount which are included in the net asset value of the
Company's interests in the two Projects in the unaudited financial statements
dated 30 September 2007.
It is currently expected that the Proposed Transaction will complete by 1 March
2008, however, this may be postponed to coincide with any change in the timing
of the IPIT Offering up until 1 June 2008. The Minimum Consideration will be
payable on completion of the Proposed Transaction. The Proposed Transaction
shall not be completed unless IPIT raises sufficient funds to pay the Cash
Consideration component of the Minimum Consideration, the cash consideration to
be received by the IBREL Group and the FIM Group to acquire their interests in
the SPVs and the expenses of the IPIT Offering.
Indiabulls Properties Investment Trust
Following completion of the Proposed Transaction, the Projects will comprise the
initial asset portfolio of IPIT. IPIT will be managed by Indiabulls Property
Management Trustee Pte. Ltd. (the "Trustee-Manager"). The Trustee-Manager is a
wholly-owned subsidiary of FoundVest Limited (the "Investment Manager"), an
entity which provides investment management services to the Company and its
wholly-owned subsidiaries (the "Dev Group").
The Trustee-Manager's key financial objective is to provide the unitholders of
IPIT (the "Unitholders") with a competitive rate of return on their investment
through regular and stable distributions to the Unitholders in the medium to
long-term and to achieve long-term growth in distribution per IPIT Unit and net
asset value per IPIT Unit.
Further details of IPIT are set out in "Annexure A - Overview of Indiabulls
Properties Investment Trust".
Indiabulls Real Estate Limited and FIM Limited
IBREL is also the sponsor of the IPIT Offering. As stated above, both the IBREL
Group and the FIM Group intend to dispose of their entire interests in the SPVs
by way of transfers to wholly-owned subsidiaries of IPIT in exchange for which
they will receive cash and IPIT Units. Following the IPIT Offering, it is
expected that the IBREL Group will have an interest of at least 26 per cent.
However, the interests of the IBREL Group and the FIM Group in IPIT will only be
finalised upon completion of the IPIT Offering. As the IBREL Group and the FIM
Group hold equity shares in entities in which the Company also holds equity
investments, under the AIM Rules, IPIT may be a related party for the purposes
of the Proposed Transaction.
The Investment Manager is a wholly-owned subsidiary of IBREL. The fees payable
by the Company to the Investment Manager for investment management services are
calculated, in part, by reference to the revenue generated by the sale of real
estate assets by the Dev Group. Further details of the investment and project
management services provided to the Dev Group are set out in Part 3 of the
Admission Document and are incorporated into this Circular by reference.
Implementation of the Company's strategy
The Board is of the view that the Proposed Transaction, when completed,
represents, in relation to the two Projects, the implementation of the Company's
investment strategy as set out in Part 2 of the Admission Document (the
"Investment Strategy").
The exit strategy of the Company, as set out in the Admission Document, is to
realise the Company's investments in its projects in a manner aimed at
maximising returns to the Company, taking into account factors such as the stage
of development of a project and occupancy levels. The Directors stated in the
Admission Document that they believed the exit strategy most likely to maximise
a return on investments may include the sale of the Company's interests in the
SPVs.
Upon listing, it was the Company's stated objective to invest in a range of
residential, commercial, information technology ("IT") and information
technology enabled services ("ITES") developments in Tier 1 cities in India, and
selected special economic zones ("SEZs") which have obtained in-principle SEZ
approval from the SEZ Board of Approval and to target projects that the
Investment Manager advised may generate a sufficient cash flow in order to
generate an internal rate of return ("IRR") of 35 per cent. or more on the
equity investment in each SPV comprising the Company's initial portfolio and an
IRR of 25 per cent. or more for subsequent investments.
The sale of the Company's interest in the SPVs for the Minimum Consideration
produces an average IRR of 35 per cent. (before the payment of the relevant
performance fees to the Investment Manager and deduction of expenses incurred by
the Company, assuming the Proposed Transaction is completed on 1 March 2008).
The relevant performance fees to be paid or accrued by the Dev Group has been
estimated by the Investment Manager to be approximately �5.6 million (assuming
the Proposed Transaction is completed on 1 March 2008 and the Company disposes
of its interests in the SPVs for the Minimum Consideration). To the extent the
consideration paid by the IPIT Group to the Company is greater than the Minimum
Consideration (assuming the Proposed Transaction is completed on 1 March 2008),
the average IRR (and the performance fees payable to the Investment Manager)
will be higher.
In the event that the Proposed Transaction completes after 1 March 2008, the IRR
achieved by the Proposed Transaction at the Minimum Consideration will be lower.
The latest date that the Proposed Transaction may complete, pursuant to the
contractual agreements described below, is 1 June 2008. In the event that the
Transaction completes on 1 June 2008, the sale of the Company's interest in the
SPVs for the Minimum Consideration produces an average IRR of 27.5 per cent.
(before the payment of the relevant performance fees to the Investment Manager
and deduction of expenses incurred by the Company). The relevant performance
fees to be paid or accrued by the Dev Group has been estimated by the Investment
Manager to be approximately �4.6 million (assuming the Proposed Transaction is
completed on 1 June 2008 and the Company disposes of its interests in the SPVs
for the Minimum Consideration).
The IRRs above are calculated by valuing the Unit Consideration at the price at
which IPIT Units may be offered to investors pursuant to the IPIT Offering. In
the event that the Company disposes of the Unit Consideration following the
expiration of the relevant lock-up period, the final IRRs achieved may be higher
or lower depending upon the time of sale, the price obtained for the IPIT Units
and any distributions received from IPIT by the Company prior to such sale.
The Board believes that a disposal of the Projects in the manner proposed
represents a favourable opportunity for the Company to realise its investment in
the SPVs and achieve IRR levels in line with the target IRRs as set out in the
Admission Document (notwithstanding that if the Proposed Transaction completes
after 1 March 2008, the targeted IRRs may not be met).
Following completion of the Proposed Transaction, the Company may benefit from
any further returns attributable to the Projects only through distributions made
by IPIT to its Unitholders. Nevertheless, the Board is of the view that given
the returns represented by a sale of the Projects at the Minimum Consideration
and the future opportunities for reinvestment of the proceeds of the Proposed
Transaction that the Directors expect to be offered pursuant to the right of
first refusal agreement between Ariston Investments Limited, a wholly owned
subsidiary of the Company ("Ariston"), and IBREL dated 26 January 2007 (the
"IBREL-Ariston ROFR"), the Proposed Transaction is in the best interests of
Shareholders, notwithstanding that it may not close up to 1 June 2008.
In the event that the IPIT Offering does not complete and the Proposed
Transaction is not consummated, the Directors intend that the Company will
continue to participate in the development of the Projects. The Directors would
also continue to consider other opportunities in respect of the assets of the
Company as and when they arise.
Application of the sale proceeds
As stated in the Admission Document, the Board envisaged either reinvesting the
proceeds of sale of a development project or making a distribution to
Shareholders, if possible. The Board intends to use the proceeds of the Proposed
Transaction to invest in further projects in line with its Investment Strategy.
The Board is currently consulting with the Investment Manager to identify
suitable investments, including co-investment opportunities with IBREL pursuant
to the IBREL-Ariston ROFR. While the Board is confident that it will be able to
reinvest the proceeds of the Proposed Transaction, if the Board is unable to
identify suitable investments, it will consider making a distribution to
Shareholders by way of a return of capital.
The Projects
The Company intends to dispose of its interests in the following Projects by way
of a sale of shares in Ariston Investments Sub A Limited ("Ariston Sub A") and
Ariston Investments Sub B Limited ("Ariston Sub B"), the companies through which
Dev holds interests in IPPL and IRECPL respectively:
Jupiter Mills
Jupiter Mills is being developed by IPPL as an integrated project with two
components. The project includes a commercial element comprising a business park
specialising in providing office space
and facilities to the IT and ITES industries ("IT Park") (which includes retail
space/mall) and a residential element. Jupiter Mills covers approximately
11.1 acres. The commercial component of the project is 9.7 acres and the
residential component is 1.4 acres. The tendering phase for Jupiter Mills has
been completed, and the construction contracts have been awarded. The
contractors and the architects for the project are currently undertaking
activities in relation to the commercial element of the project. The detailed
plans and implementation of the residential element of the project are being
developed and finalised.
The Jupiter Mills site is located between Nariman Point (the main Mumbai central
business district) and Bandra Kurla Complex (suburban business district) on a
site measuring approximately 11.1 acres of the former Jupiter Mills textile mill
at Lower Parel Road in Lower Parel. The site is adjacent to a 100 ft wide
arterial road, Senapati Bapat Marg (Tulsi Pipeline Road) and is situated 0.1 km
from Elphinstone Road railway station and 4.0 km from the Western Express
Highway. The site is situated 1.0 km from the site of a premium residential
scheme proposed at Bombay Dyeing Mill, Naigaon, and commercial, retail and
office spaces developed in Kamala Mill, Phoenix Mill and Raghuvanshi Mill. ITC
Grand Hotel, a five star hotel, is located 2.0 km from the project site and
connected by an arterial road. The site is close to the premium residential
developments in the Worli and Prabhadevi suburbs of central Mumbai.
IPPL acquired the Jupiter Mills land from National Textile Corporation (South
Maharashtra) Limited (a subsidiary of National Textile Corporation ("NTC"), a
Government of India ("GOI") owned and operated undertaking) through an auction
process in July 2005. IPPL holds freehold title to the land. IPPL received
approval from the State of Maharashtra to establish an IT Park and an approval
to establish an Industrial Park from the Ministry of Commerce and Industry, GOI
at the project site in February 2006 and April 2006 respectively. IPPL is
awaiting the final approval for its industrial park status from the GOI. IBREL
obtained a commencement certificate from the Municipal Corporation of Greater
Mumbai in September 2006. The approvals for the residential component of the
project have not yet been obtained and steps to obtain these approvals will be
initiated upon finalisation of the development plans for the residential element
of the project.
Jupiter Mills has a planned total 1,433,000 sq ft of lettable office space,
438,000 sq ft of lettable retail space, a residential element comprising 119,000
sq ft of saleable area and 3,500 car parking spaces. Construction work on the
project is substantially advanced and is expected to be completed by 30 June
2008. The detailed schedule is set out in the table below.
Building Expected completion date(1) Total LA (sq ft)
Tower 1 31 March 2008 458,000
Tower 2 31 May 2008 975,000
Mall 30 June 2008 438,000
Total 1,871,000
__________
Notes:
(1) Date when construction is completed. The car parks are expected to be
completed by 31 December 2008.
As at 1 October 2007, Knight Frank valued the Jupiter Mills Project at
�870.0 million.
As at the date of this Circular, Jupiter Mill has entered into letters of intent
("LOIs") in respect of approximately 644,000 sq ft, amounting to approximately
34 per cent. of the aggregate estimated lettable area ("LA") for Jupiter Mill
when fully completed. Each LOI is typically secured by a monetary deposit
equivalent to three to six month of base rental income payable by the potential
tenant under the LOIs. The monetary deposit shall be adjusted against the
refundable security deposit which shall be taken upon entering into the lease
agreement which security deposit is an amount equivalent to approximately six to
12 months of the base rental income. Jones Lang LaSalle has been engaged to
identify potential tenants and negotiate lease agreements in respect of the
project. The tenant profile of Jupiter Mills is expected to be diverse and
includes banks, financial institutions, large corporates and high-end retailers.
The Directors expect that the majority of the leases to be entered into for the
project will be for initial periods of three years with security deposits of six
to 12 months. At the end of the lease term, the tenant will usually have an
option to renew the lease term for two further terms of three years each. The
leases will typically provide for base rent escalation rates of approximately
15 per cent. after three years, taking effect upon renewal of the leases.
With regard to the residential component of the project, the Trustee-Manager is
expected to sell all units in the residential building to customers.
The losses before income tax attributable to Ariston Sub A for the year ended
30 September 2007 were �2,199. Ariston Sub A generated no revenue in the year
ended 30 September 2007 and all losses in such period are attributable to costs
and expenses.
Elphinstone Mills
Elphinstone Mills is being developed by IRECPL as an IT Park under the
Government of Maharashtra IT/ITES Policy 2003. Elphinstone Mills site is located
on 7.8 acres in Lower Parel in close proximity to Jupiter Mills. IRECPL acquired
Elphinstone Mills land from the National Textile Corporation (South Maharashtra)
Limited (a subsidiary of NTC, a GOI owned and operated undertaking) through an
auction process in March 2006, and holds freehold title to the land.
IRECPL received an approval from the Ministry of Commerce and Industry, GOI, to
establish an industrial park and an approval from the State of Maharashtra to
establish an IT Park at the project site in April 2006 and September 2006
respectively. IRECPL has made an application for renewal of its approval for its
industrial park status with the GOI. IBREL obtained a commencement certificate
from the Municipal Corporation of Greater Mumbai on 17 February 2007 whereby
construction work was authorised to begin. Construction work has started at the
site and is expected to be completed in phases by the end of 2008.
It is expected that Elphinstone Mills shall have a total of 1,536,000 sq ft of
lettable office space and 3,000 car parking spaces to be completed post-listing
of IPIT.
Building Expected completion date(1) Total LA (sq ft)
Tower 1 31 July 2008 431,000
Tower 2 30 September 2008 519,000
Tower 3 30 November 2008 586,000
Total 1,536,000
__________
Notes:
(1) Date when construction is completed. The car parking spaces are expected to
be completed by 30 November 2008.
As at 1 October 2007, Knight Frank valued the Elphinstone Mills Project at
�698.8 million.
Tenant Information and Features of the Property
It is the intention that the targeted tenants' profile and the features of
Elphinstone Mills will be similar to that of Jupiter Mills.
The losses before income tax attributable to Ariston Sub B for the year ended
30 September 2007 were �2,116. Ariston Sub B generated no revenue in the year
ended 30 September 2007 and all losses in such period are attributable to costs
and expenses.
Contractual Agreements
Share purchase agreement
In order to effect the sale of the Company's interests in the SPVs, the relevant
members of the Dev Group (the "SPV Shareholders") will enter into a share
purchase agreement (the "SPA") with certain members of the IPIT Group, the IBREL
Group and the FIM Group. The SPA provides, inter alia, for the sale of Ariston's
stakes in Ariston Sub A and Ariston Sub B (which own 13 per cent. in IPPL and
IRECPL, respectively) for the Final Consideration. The Final Consideration shall
not be less than the Minimum Consideration, however, the Company may be
required, pursuant to the SPA, to complete the Transaction for the Minimum
Consideration only.
The transactions contemplated in the SPA are conditional upon certain conditions
precedent being satisfied, including, inter alia, the IPIT Units being listed on
the SGX-ST pursuant to the successful completion of the IPIT Offering, IPIT
raising sufficient funds in order to pay the Cash Consideration for the
Company's interests in the Projects and the Proposed Transaction expenses, the
Proposed Transaction being approved by Shareholders, receipt of necessary
corporate approvals for sale of the shares by each party, representations and
warranties from the respective parties being true and correct and the various
steps contemplated under the SPA being completed on a simultaneous basis
including the payment of the purchase consideration and issue of the IPIT Units
to the sellers. The SPA will terminate automatically if the Proposed Transaction
has not completed on a date no later than 1 June 2008.
The SPA will contain covenants, warranties and indemnities to be given by the
SPV Shareholders that are customary for transactions of this type. The
warranties to be given by the SPV Shareholders relate primarily to title to
shares, corporate authority and approvals. The liability of each SPV Shareholder
under the terms of the SPA is capped at an amount equal to the consideration
received by each under the SPA. The agreement is governed by the laws of
Singapore.
Right of first refusal agreement
The Company, Ariston and IBREL (collectively the "Relevant Entities" and
individually a "Relevant Entity") intend to enter into an agreement (the "IPIT
ROFR") with the Trustee-Manager pursuant to which they will grant a right of
first refusal over any proposed offer of sale by the Company, Ariston, IBREL and
/or their respective subsidiaries of any FDI compliant real estate project used
primarily for IT, ITES or commercial office purposes with a LA of not less than
500,000 sq ft (a "Relevant Asset") and which is at least 75 per cent. completed
or binding lease arrangements for at least 75 per cent. of the estimated LA has
been entered into (a "Qualifying Relevant Asset").
The IPIT ROFR shall also operate where there is a proposed sale to any of the
Relevant Entities by a third party of any interest in a Qualifying Relevant
Asset. The right of first refusal shall also operate six months after the date
on which a Relevant Asset becomes a Qualifying Relevant Asset or where there is
a proposed sale by any of the Relevant Entities of any of its interest in a
Relevant Asset to a third party if such sale would result in the residual
aggregate interests of the Relevant Entities in the Relevant Asset falling below
51 per cent.
If the Trustee-Manager does not enter into a binding commitment for the purchase
of the entire of the interest of the Relevant Entity or the third party in the
Qualifying Relevant Asset or the Relevant Asset within 60 days (or such longer
period as may be mutually agreed) from the date of the Trustee-Manager's receipt
of the relevant notice or information (as provided for in the IPIT ROFR), or the
Trustee-Manager indicates in writing to the Relevant Entity or the third party,
that it shall not be purchasing the interest in the Qualifying Relevant Asset or
the Relevant Asset, or any of the conditions precedent or long-stop date in any
agreement in connection with the proposed purchase of interest of the Relevant
Entity or the third party in the Qualifying Relevant Asset or the Relevant Asset
could not be met, each Relevant Entity shall, for a period of six months after
such occurrence, be entitled to sell its interest or purchase the third party's
interest in the Qualifying Relevant Asset or the Relevant Asset without any
obligation to first offer such asset to the Trustee-Manager, provided such offer
is on terms and conditions no more materially favourable than those offered by
the Relevant Entity or the third party to the Trustee-Manager (on a pro rata
basis where applicable). If the terms offered to such third party in respect of
a Relevant Asset are materially more favourable, the opportunity to invest in
such Relevant Project must be offered to the Trustee-Manager again. The offer of
any interest in a project by the Company pursuant to the IPIT ROFR is
conditional upon Shareholder approval (if required under the AIM Rules).
No fee (other than nominal consideration) will be payable by either party in
connection with the IPIT ROFR.
The Board believes that IPIT may provide an exit vehicle for the disposal of the
Company's interests in its current or any future investments. The IPIT ROFR does
not impose an obligation on the Relevant Entities to dispose of any real estate
interests. Upon a proposed sale of any real estate interest, the Company is only
obliged to offer such interest to the IPIT Group at a price and on terms that
the Company considers appropriate. Therefore the Board does not believe that the
IPIT ROFR significantly restricts the Company's ability to sell its real estate
interest on favourable terms.
The IPIT ROFR is subject to, and the Company will continue to have, a right of
first refusal right over certain qualifying projects developed by the IBREL
Group pursuant to the IBREL-Ariston ROFR, the details of which are set out in
Part 3 of the Admission Document. In addition, the IPIT ROFR does not exclude
transfers between the Relevant Entities inter se or to a third party of a
Relevant Asset up to the stage that a Relevant Asset becomes a Qualifying
Relevant Asset.
Lock-up of IPIT Units held by the Company
As part of the IPIT Offering, any IPIT Units held directly or indirectly by the
Company will be subject to a lock-up agreement (the "Lock-up Agreement") under
which it will not (subject to certain exceptions), during the period commencing
from the date of the listing of the IPIT Units on the SGX-ST (the "Listing
Date") until the date falling six months after the Listing Date (the "First
Lock-up Period"), directly or indirectly, offer, sell, contract to sell, grant
any option to purchase, grant security over, encumber or otherwise dispose of,
any or all of the IPIT Units held directly or indirectly by the Company (the
"Lock-up Units") (or any securities convertible into or exchangeable for Lock-up
Units or which carry rights to purchase Lock-up Units or part thereof); enter
into a transaction (including a derivative transaction) with a similar economic
effect to the foregoing; deposit any Lock-up Units (or any securities
convertible into or exchangeable for Lock-up Units or which carry rights to
purchase Lock-up Units) in any depository receipt facility; enter into a
transaction which is designed or which may reasonably be expected to result in
any of the above; or publicly announce any intention to do any of the above.
In addition, the same restrictions will apply in respect of 50 per cent. of the
Lock-up Units held (indirectly) by the Company for a further period of six
months commencing from the day immediately following the expiry of the First
Lock-up Period (the "Second Lock-up Period"). Under these proposals, the Company
would also agree (subject to certain exceptions) that it would not dispose of
its interests in Ariston during the First Lock-up Period or during the Second
Lock-up Period.
IBREL and FIM will both be subject to the same lock-up arrangements in respect
of any IPIT Units they hold in IPIT.
The SPA, IPIT ROFR and Lock-up Agreement are currently under review by SGX-ST in
connection with the IPIT Offering. SGX-ST may require that the terms of such
agreements are amended. The Board may, at its discretion, amend the terms of the
SPA, IPIT ROFR and Lock-up Agreement as described above in order to satisfy the
requirements of SGX-ST.
Shareholders' Agreement
Although, following completion of the Proposed Transaction, the Company will
continue to have an (indirect) economic interest in the Projects through its
holding of IPIT Units, the shareholders' agreement entered into by certain
members of the Dev Group and certain members of the IBREL Group on 26 January
2007 shall terminate and the SPV Shareholders will cease to enjoy the rights in
relation to the SPVs described in paragraph 8(e) (Shareholders' Agreements) of
Part 11 of the Admission Document.
Investment Manager Waiver
Pursuant to the investment management agreement between the Company, Ariston and
the Investment Manager dated 26 January 2007 (the "Investment Management
Agreement"), the Investment Manager agrees not act as adviser or perform
investment management or other services for any person or entity other than
Ariston or any Investee Company (as defined in the Investment Management
Agreement) and, other than as provided for in the Investment Management
Agreement, the Investment Manager agrees not conduct any other business
including making investments for its own account or the accounts of any other
person or entity (the "Investment Manager Restrictions").
In connection with the IPIT Offering, the Company has waived the Investment
Manager Restrictions in respect of the incorporation of the Trustee-Manager and
the undertaking of roles and responsibilities by the Trustee-Manager in favour
of IPIT under certain agreements and arrangements to be entered into between
IPIT and the Trustee-Manager. The Trustee-Manager will have separate management
and employees from that of the Investment Manager and it shall also have a
separate board of directors. The boards of directors of the Investment Manager
and the Trustee-Manager will have no common members.
Update on Raigarh SEZ Project
The land acquisition and aggregation process is in progress. This is a long-term
project with future development potential requiring further regulatory approvals
and significant capital expenditure. Following completion of the Proposed
Transaction, the Raigarh SEZ will be, together with the Company's interest in
the IPIT Units, the Dev Group's sole real estate development investments.
Further information
Shareholders should read the whole of this Circular and the information
incorporated by reference and not just rely on the information contained in this
document.
Admission Document
The Admission Document is available on the Company's website at http://
www.devpropertydevelopment.com.
Extraordinary General Meeting
The EGM has been convened for 10 am on 25 January 2008. At the EGM, the
Resolutions will be proposed that:
A. the Proposed Transaction (including the amount and composition of
consideration to be received) be approved and that the Directors be empowered
to:
(i) procure the entry into the proposed share purchase agreements by the
relevant direct and indirect shareholders of the SPVs to effect the sale of the
Company's entire (indirect) interest in the SPVs to companies controlled by
IPIT;
(ii) enter into, and procure the entry by any subsidiary of the Company into,
the proposed right of first refusal agreement with, inter alia, the
Trustee-Manager; and
(iii) enter into, and procure the entry by any subsidiary of the Company into,
such other documents and perform such other acts as the Directors of the Company
deem necessary to effect such Proposed Transaction,
at such time as the Board approves up to 1 June 2008; and
B. the disposal of all or part of the Unit Consideration at a minimum price of
not less than a 10 per cent. discount to the prior month's average daily closing
price of the IPIT Units at the time of such disposal (in one or a series of
transactions) be approved.
The Notice of the EGM is set out below.
Note on IRR targets
The Company cannot guarantee any IRR on its investments. Any targeted IRR is
merely an investment objective and not a guarantee of any anticipated return.
The Company or its investments may not be able to achieve such targeted return
consistently, or at all, and further sales of the real estate interests of the
Dev Group may not be at the IRR achieved upon the proposed sale of the Projects.
The Company's IRR will be reduced by investment management fees and costs
incurred by the Dev Group.
Press Announcement
The announcement of the Proposed Transaction was made on the same date as this
Circular and is available on the Company's website at http://
www.devpropertydevelopment.com.
Action to be taken by Shareholders
You will find enclosed with this Circular a form of proxy for use at the EGM or
any adjournment thereof. Whether or not a Shareholder wishes to attend the EGM,
he/she is urged to complete and return the enclosed form of proxy in accordance
with the instructions set out thereon, as soon as possible but in any event by
no later than 10 am on 23 January 2008. Completed forms of proxy should be
returned to the offices of Capita Registrars (Isle of Man) Limited, Third Floor
Exchange House, 54-62 Athol Street, Douglas, Isle of Man IM1 1JD. The completion
and return of the form of proxy will not preclude a Shareholder from attending
and voting in person at the EGM if he/she so wishes.
Related Party Transaction
As described above, IPIT may be a related party for the purposes of the
Transaction. The Directors consider, having consulted with Numis, that the terms
of the Proposed Transaction are fair and reasonable insofar as the Shareholders
are concerned.
Recommendation
The Directors unanimously recommend Shareholders to vote in favour of the
Resolutions to be proposed at the EGM as they intend to do in respect of their
own holdings of Shares.
Yours sincerely
Rishi Khosla
Chairman of Dev Property Development plc
Annexure A
Overview of Indiabulls Properties Investment Trust
IPIT is a proposed Singapore-based business trust to be established with the
principal objectives of investing, either directly or indirectly, primarily in
income-producing office space in India; acquiring and developing primarily
office space in India with the intention of holding such properties upon
completion; and investing in real-estate related assets in connection with the
foregoing. Following completion of the Proposed Transaction, the Projects will
comprise the initial asset portfolio of IPIT.
Distributions by IPIT
It is part of IPIT's strategy to deliver regular and stable distributions to the
Unitholders and to achieve long-term growth in the net asset value per unit.
IPIT will distribute 100 per cent. of its distributable income for the period
from the Listing Date to 31 March 2010. Thereafter, IPIT will distribute at
least 90 per cent. of its distributable income in accordance with the terms of
the trust deed governing the business trust (the "Trust Deed"). IPIT's first
distribution after the Listing Date will be for the period from the Listing Date
to 30 September 2008 and will be paid by the Trustee-Manager on or before
31 December 2008. Subsequent distributions will take place on a semi-annual
basis.
Restrictions on activities
While business trusts such as IPIT are not bound by the Singaporean Property
Funds Guidelines issued by the Monetary Authority of Singapore (the "PFGs")
which apply to real estate investment trusts ("REITs"), IPIT has voluntarily
elected to adopt and has incorporated into the Trust Deed certain REIT-like
characteristics with the intention to protect Unitholders' interest and to
enhance the stability of distributions. These include the following
restrictions:
(a) IPIT may not carry on any other principal activities other than certain
authorised businesses (which include, for example, the acquisition, disposal and
ownership of any interests in real estate, whether freehold or leasehold, in or
outside India, held singly or jointly, and/or by way of direct ownership or by a
shareholding in a special purpose vehicle) and of which at least 75 per cent. of
IPIT's trust property should be invested in real estate;
(b) limiting the gearing of IPIT to 35 per cent. of the trust property of IPIT
unless a credit rating from Fitch Inc., Moody's or Standard & Poor's is obtained
in which case gearing cannot exceed 60 per cent. of the trust property of IPIT
or such higher percentage limits as property funds may from time to time be
permitted under the PFG (where the gearing limited is breached, the Trust Deed
provides that it will have a six-month grace period to remedy the breach); and
(c) limiting IPIT's investments to permissible investments, similar to those
specified under the PFG.
In addition, IPIT will target to limit its property development activities to
25 per cent. of the trust property of IPIT in the medium to long-term.
Rights of Unitholders
The rights and interests of Unitholders are contained in the Trust Deed. Some of
the key rights and obligations of Unitholders include, but are not limited to,
the following:
(a) rights to receive income and other distributions attributable to the IPIT
Units held; receive audited accounts and the annual reports of IPIT; and
participate in the termination of IPIT by receiving a share of all net cash
proceeds derived from the realisation of the assets of IPIT less any
liabilities, in accordance with their proportionate interests in IPIT;
(b) no Unitholder has a right to require that any asset of IPIT be transferred
to him or her;
(c) Unitholders cannot give any directions to the Trustee-Manager (whether at a
meeting of Unitholders or otherwise) if it would require the Trustee-Manager to
do or omit doing anything which may result in:
(i) IPIT ceasing to comply with applicable laws and regulations; or
(ii) the exercise of any discretion expressly conferred on the Trustee-Manager
by the Trust Deed;
(d) the Trust Deed contains provisions that are designed to limit the liability
of a Unitholder to the amount paid or payable for any IPIT Unit and the
provisions seek to ensure that if the issue price of the IPIT Units held by a
Unitholder has been fully paid, no such Unitholder, by reason alone of being a
Unitholder, will be personally liable to indemnify the Trustee-Manager or any
creditor of IPIT in the event that the liabilities of IPIT exceed its assets;
(e) every IPIT Unit carries the same voting rights; and
(f) Unitholders have no right to request the Trustee-Manager to redeem their
IPIT Units while the IPIT Units are listed.
It is intended that Unitholders may only deal in their listed IPIT Units through
trading on the SGX-ST. Listing of the IPIT Units on the SGX-ST does not
guarantee a liquid market for the IPIT Units.
DEFINITIONS
The following definitions apply throughout this Circular unless the context
requires otherwise:
"�" Pounds Sterling, being the lawful currency for the time being of the United Kingdom;
"Admission Document" the Admission Document published by the Company dated 29 January 2007;
"Ariston" Ariston Investments Limited, a wholly owned subsidiary of the Company;
"Ariston Sub A" Ariston Investments Sub A Limited, a wholly owned subsidiary of the Company;
"Ariston Sub B" Ariston Investments Sub B Limited, a wholly owned subsidiary of the Company;
"AIM" AIM, a market operated by the London Stock Exchange plc;
"AIM Rules" the AIM Rules for Companies;
"Board" the board of Directors;
"Cash Consideration" part of the Final Consideration to be satisfied in cash;
"Circular" this document;
"Company" Dev Property Development plc;
"Dev Group" the Company and/or its wholly-owned subsidiaries;
"Directors" the directors of the Company;
"EGM" the extraordinary general meeting of the Company to be held on 25 January 2008;
"Elphinstone Mills" the Elphinstone Mills Project;
"FIM" FIM Limited;
"FIM Group" FIM and/or its subsidiaries;
"Final Consideration" the actual consideration received by the Company for its interest in the Projects;
"GOI" Government of India;
"IBREL" Indiabulls Real Estate Limited;
"IBREL-Ariston ROFR" the right of first refusal agreement between IBREL and Ariston dated 26 January 2007;
"IBREL Group" IBREL and/or its subsidiaries;
"Initial Investment" the initial consideration of �82.7 million paid by the Company for its interests in the
Projects;
"Investment Manager" FoundVest Limited;
"Investment Strategy" the Company's investment strategy set out in Part 2 of the Admission Document;
"IPIT" Indiabulls Properties Investment Trust;
"IPIT Group" IPIT and/or its direct or indirect wholly-owned subsidiaries;
"IPIT Offering" the offer by IPIT of IPIT Units by way of an international placement to investors and an
offering to the public in Singapore;
"IPIT ROFR" the right of first refusal agreement to be entered into between the Company, Ariston,
IPIT and the Trustee-Manager;
"IPIT Units" units representing undivided interests in IPIT;
"IPPL" Indiabulls Properties Private Limited;
"IRECPL" Indiabulls Real Estate Company Private Limited;
"IRR" Internal Rate of Return;
"IT" information technology;
"ITES" information technology enabled services;
"IT Park" a business park specialising in providing office space and facilities to the IT and ITES
industries;
"Knight Frank" Knight Frank (India) Private Limited;
"LA" in respect of a property, the sum of the floor area enclosed within the walls, the area
occupied by the walls and the common areas such as lift lobbies, lift shafts, toilets
and staircases of that property, in respect of which rent is payable;
"Listing Date" the date of admission of IPIT to the official list of the SGX-ST;
"Lock-up Agreement" the lock-up agreement described on page 7 of this Circular;
"Minimum Consideration" �114 million;
"NTC" National Textile Corporation;
"Notice" the notice of the EGM attached to this Circular;
"Numis" Numis Securities Limited;
"Projects" Jupiter Mills and Elphinstone Mills;
"Proposed Transaction" the proposed disposal of the Company's interests in the SPVs;
"Qualifying Relevant Asset" a Relevant Asset which has reached the stage of development when the LA of the Relevant
Asset is at least 75 per cent. completed or binding lease arrangements for at least 75
per cent. of the estimated LA have been entered into in the reasonable opinion of the
Relevant Entity;
"Relevant Asset" a foreign direct investment compliant real estate project, intended primarily for IT,
ITES and/or commercial office purposes with a LA of not less than 500,000 sq ft;
"Relevant Entity" the Company, Ariston and/or IBREL;
"Resolutions" the resolutions set out in the Notice;
"SEZ" Special Economic Zone;
"SGX-ST" Singapore Exchange Securities Trading Limited;
"Shareholders" the shareholders of the Company;
"Shares" the ordinary shares of the Company;
"SPA" the share purchase agreement to be entered into by the SPV Shareholders and the
appropriate members of the IPIT Group in order to effect the sale of the Company's
(indirect) interests in the SPVs;
"SPV Shareholders" the direct shareholders of the SPVs that are members of the Dev Group;
"SPVs" IPPL and IRECPL;
"Trustee-Manager" Indiabulls Property Management Trustee Pte. Ltd. (as trustee-manager of IPIT);
"Unit Consideration" part of the Final Consideration to be satisfied in IPIT Units; and
"Unitholders" the registered holder for the time being of an IPIT Unit
This information is provided by RNS
The company news service from the London Stock Exchange
END
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