Meridian Properties Cancels $230 Million IPO in Warsaw

Meridian Properties NV, an Amsterdam-based real estate investment trust, scrapped a 170 million-euro ($230 million) initial public offering in Poland, citing “adverse” market conditions.

The company ended bookbuilding for new shares yesterday, seeking funds to buy property in Romania, Hungary, Bulgaria, the Czech Republic and Poland. Meridian, which was to become the first REIT listed on central Europe’s largest equity market, had earlier suspended the offering in June. REITs pay investors rental income generated from their properties.

Meridian planned to purchase some properties from Bluehouse Capital Advisors Ltd., which controls the REIT, according to a prospectus on Meridian’s website. The company sought to “capitalize on its strategic relationship with Bluehouse to maintain access to a strong pipeline of real estate investments,” it said in the document.

“Investors disliked the fact Meridian would use the proceeds from the IPO to buy properties from a private equity company that controls Meridian,” Jaroslaw Lis, who helps manage the equivalent of $1 billion at BPH TFI SA mutual fund in Warsaw, said by e-mail today. “Some properties are in southeastern Europe, which also may have discouraged buyers.”

Real Estate

Warsaw’s WIG30 Index declined for a third day yesterday as the U.S. government shutdown continued and President Barack Obama said the U.S. economy risks a “very deep recession” if Congress doesn’t raise the debt ceiling. Swiss real estate company Ledermann Immobilien AG yesterday postponed a 130 million Swiss francs ($143 million) IPO because of lower-than-anticipated interest for its shares.

Globe Trade Center SA, the Polish property developer that invests in Romania, Bulgaria and Croatia, posted losses in eight of the last nine quarters as economic slowdown cut real-estate prices.

Meridian’s IPO would have been among the biggest in Poland this year. State railway Polskie Koleje Panstwowe SA yesterday started a 1.6 billion-zloty offering of its cargo unit and warehouse developer MLP Group SA plans to sell to the public as much as 98 million zloty of shares this month. Peixin International Group NV, a Chinese machinery producer, sold 16 million zloty of shares in a Warsaw IPO last month, cutting the offer from 100 million zloty.

Citigroup Inc. was the Meridian IPO’s sole global coordinator and bookrunner, while Raiffeisen Bank International AG, Erste Group Bank AG and Alpha Bank were co-lead managers.

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