News

Expat Beta plans to invest in high-quality distressed assets

28.05.2010 / Press releases

Expat Beta REIT is ready to make the first investment within weeks after the capital increase, Mr. Nicola Yankov and Mr. Nikolay Vassilev, managing partners at Expat Capital, announced yesterday, 27 May. Over 200 guests came at the Radisson Hotel for the investment presentation about the IPO and the opportunities for investments in distressed assets.

The public offering of shares started on 21 May 2010. The issue is to the amount of 43,428,900 ordinary shares with an issue price of BGN 1 per share. With this capital increase the share capital could reach BGN 47,771,790.
If the capital increase is successful, the REIT could play a key role on the distressed assets market in Bulgaria. After the real estate and construction bubble in 2002-08, there are many good new developments in distressed situations. Because of the recession we expect a wave of foreclosures and liquidations. Expat Beta REIT aims to be among the very few buyers with cash.

Currently the REIT is evaluating a solid pipeline of a dozen projects, matching the investment criteria – prime locations, investment-grade building quality, no development risk, project in financial distress.

Expat Beta has three rules of thumb:
• Acquire new developments at or below loan value for leveraged projects (50-75% of investment cost)
• Acquire commercial properties to let, at a price allowing a 20% rental yield. Sell at lower yields aiming at doubling the initial investment within a 2-3-year horizon
• Acquire distressed properties with a hold-and-sell strategy aiming at doubling the initial investment within a 2-3-year horizon

Every current investor gets 1 tradable right per each share, which entitles him to buy 10 new shares. The current investors can either exercise their rights or sell them in the stock market. The rights will be traded on the stock market from 31 May to 28 June 2010. An open tender for the unexercised rights will be held on 7 July, the new shares can be bought till 21 July. The expected time for the start of the trading of the new shares is at the end of August.
Expat Beta REIT, managed by Expat Capital, is listed on the Bulgarian Stock Exchange – Sofia. This is one of the few stocks in Bulgaria whose market price has not fallen during the crisis. Some of the reasons are that the fund has zero bank deb and owns prime quality assets