Meridian Properties NV, an Amsterdam-based real estate investment trust, started a 170 million-euro ($230 million) initial public offering to raise funds for expansion in central Europe.
The REIT, which pays investors rental income generated from its properties, will end bookbuilding in the sale of 18 million new shares and set an IPO price on Oct. 8, it said in a prospectus on its website today. Meridian plans to start trading on the Warsaw exchange on Oct. 24 and become the first REIT to be listed on central Europe’s largest equity market.
Meridian is seeking funds to invest in Romania, Hungary, Bulgaria, the Czech Republic and Poland after property prices slumped amid the global financial crisis, Chief Executive Officer Yannis Delikanakis said at a press conference today.
“We believe the recovery will take some time and it will be a gradual process,” Delikanakis said. Buying at the bottom of the cycle gives you “a luxury of waiting” for the recovery.
The company resumed its share sale plans after suspending the transaction in June on “deteriorating” market conditions. Its IPO is set to be among the largest in Warsaw in 2013, according to data compiled by Bloomberg. Polish railway Polskie Koleje Panstwowe SA plans to sell to the public a stake in its cargo unit in the coming weeks and the government will offer a 35 percent stake in power utility Energa SA later this year.
The European Bank for Reconstruction and Development plans to buy as much as 23 million euros of shares in the Meridian IPO, according to the prospectus. That will give it a stake of as much as 16 percent, Delikanakis said. The London-based EBRD will keep the shares for 180 days after the purchase.
Cyprus-based BH Meridian Participations Ltd., currently holding 100% of the REIT, will own at least 5 percent of Meridian after investing 10 million euros in the IPO.
The trust will use 87.7 million euros from the IPO to buy a so-called initial portfolio, which includes nine properties in Bulgaria, Romania, Hungary and the Czech Republic. The REIT will spend a further 57.4 million euros on other real-estate investments as the company is in “advanced” talks to buy two properties in Poland, it said in a statement on Sept. 24.
Meridian plans to pay out all its funds from operations as a quarterly dividend starting from January next year, while maintaining a loan-to-value ratio of 35 percent to 45 percent.
The initial portfolio generated pro-forma funds from operations at 8.2 million euros in 2012, Meridian said in a presentation in Warsaw today. Completing the purchase of two Warsaw properties would raise that income “significantly,” Chief Financial Officer Alexis Iordanides told reporters today.
Citigroup Inc. is the IPO’s sole global coordinator and bookrunner, while Raiffeisen Bank International AG, Erste Group Bank AG and Alpha Bank are acting as co-lead managers.