Secure Property agrees conditional sale of Kiev asset

South eastern Europe-focussed property and investment company Secure Property Development and Investment announced the conditional sale of its Kiyanovski land asset in central Kiev, Ukraine on Tuesday to domestic firm Riverside Developments for a price to be finally determined at closing, in excess of $3m.

The AIM-traded company said that, as part of a pre-sale and purchase agreement signed by both parties, Riverside would pay SPDI a non-refundable deposit of $100,000 in exchange for being granted a period of four months during which it will seek to obtain a construction permit to develop Kiyanovski.

Subject to the issue of the permit and other relevant authorisations, both parties will sign a sale and purchase Agreement covering the sale of Kiyanovski.

The potential sale of Kiyanovski, which consists of 0.55 Ha of land near the centre of Kiev overlooking the scenic Dnipro River, St Michaels' Spires and the historic Podil district, formed part of the company's strategy to focus on income-producing assets in high-yielding South Eastern European countries such as Romania and Greece while limiting its exposure in Ukraine, the board said.

In line with that strategy earlier in the year SPDI completed the sale of the Terminal Brovary warehouse in Kiev at a gross asset value of more than $16m, which generated a profit for SPDI of around €2.7m as well as a cash inflow of about €3.5m.

SPDI said it was continuing to evaluate its options for its other land assets in Ukraine.

“As with the recent disposal of Terminal Brovary, today's conditional sale once again highlights the substantial value that the company's assets command in the market, even under the difficult conditions the Ukraine economy has found itself in the last few years,” said CEO Lambros Anagnostopoulos.

“Furthermore, this value was likely underestimated in our conservative year-end audited asset valuations, and represents a big disparity when compared to the level the market values the company.

“For example, as at 31 December the net asset value of our property assets stood at €38.9m, value confirmed by the two sales effected in the first half of 2017, but which is almost twice the level of SPDI's current market capitalisation.”

Anagnostopoulos said the sales were “in line” with the company’s strategy to generate value from all its property assets, including non-core ones.

“Our objective is to create attractive returns for shareholders through both capital appreciation and the distribution of regular cash dividends in the mid-term.

“By exposing investors to key regional growth drivers and the ongoing European yield compression play, our core portfolio of prime real estate, which generated an operating income - including net income resulting from on-going sales of residential assets and other non-core assets - of €6.4m in the last financial year and which also includes numerous non-core residential and land assets that produce little or no income, provides us with an excellent platform with which to achieve our goal.”

With that in mind, Anagnostopoulos said the company and the board were focused on building the portfolio further.