ERET European Real E

TIDMERET

RNS Number : 2043I

European Real Estate Inv Tst Ltd

01 July 2013

European Real Estate Investment Trust Limited

1 July 2013

Asset Sale and Lease Renegotiation

Disposal

The Board of European Real Estate Investment Trust ("the Group") is pleased to announce it has sold its largest property asset, an office building in St Etienne, France.

The property was sold for EUR 66.0 million and the price achieved was approximately 1.9% above the Company's December 2012 valuation.

The building was constructed in 2007 and is located in the new business district of St Etienne. It is arranged over seven floors to provide 36,655 sq m of offices, car park and related accommodation. The property is let in its entirety to one single tenant.

Sales proceeds after costs have enabled the Group to repay EUR 60.2 million of debt. As a result of this repayment the overall loan-to-value (LTV) has reduced to 60.8%. The LTV is now below the 65% threshold set by the Lloyds Banking Group ("LBG") senior debt facility, above which surplus income is required to amortise debt. The Group now has valuation headroom of circa 18.9% based on 31 December 2012 values before the 75% LTV covenant is breached.

Part of the remaining proceeds have been used to partially terminate the capital element of its foreign exchange contract such that the end transaction in June 2014 will now exchange EUR69.2 million for GBP46.7 million. The cost of this was EUR3.8 million and the associated liability reduces by the same amount.

This sale is consistent with the strategy announced by the Group to conduct an orderly disposal of its assets.

As a result of all cash proceeds being used to reduce the liabilities of the Company, no distribution to shareholders is envisaged from this sale.

Lease renegotiation

A lease amendment has been agreed with the tenant of the 36,720sqm office property owned by the Company in Nice, France.

The lease will continue until March 2015 and the tenant will occupy 63% of the total accommodation at a revised rent of EUR2.5 million per annum, having been reduced from EUR3.9m per annum. As a part of the transaction the Company also received a payment of EUR1.3 million.

This provides the Company with additional options for the future occupation of the site.

For further information, please contact:

Praxis Fund Services Limited

   Shona Darling                                                             Phone: +44(0) 1481 755528 

Cenkos Securities plc

Dion Di Miceli Phone: +44 (0) 20 7397 1921

Schroder Property Investment Management Ltd

   Duncan Owen / Tony Smedley                                  Phone: +44(0) 20 7658 6000 

This information is provided by RNS

The company news service from the London Stock Exchange

END

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