ECPC European Conv.

 

TIDMECPC 
 
RNS Number : 8277L 
European Convergence Property CoPLC 
13 May 2010 
 

13th May, 2010 
 
                    EuroPean convergence PROPERTY company plc 
                            ("ECPC" OR "THE COMPANY") 
 
          Shareholder Update from 1st January, 2010 to 31st March, 2010 
 
The purpose of this document is to update shareholders with new developments 
since the Company's last report dated 31st January, 2010. This update should be 
read in conjunction with all prior reports, which provides commentary on the 
historical evolution of the Company's business, and the associated detailed 
background information. 
 
Corporate Developments 
 
DEGI Holdbacks 
 
In 2007 ECPC exited the Romanian market when it disposed of three Bucharest 
office assets to the German based fund DEGI (now re-named Aberdeen).  As stated 
in the last update ECPC agreed to certain deferred payments. In December verbal 
agreement was reached between DEGI and ECDC settling DEGI's net retention from 
the deferred sales proceeds at EUR0.9m. 
 
Final agreement on the documentation to be signed was reached at the beginning 
of February 2010, and the Settlement Agreement was signed on February 24th. 
 
The process to obtain release of the funds from the Escrow account has been held 
up by the depositary bank which is undertaking extensive due diligence on the 
validity of the documentation signed in relation to the settlement and also in 
relation to the two corresponding parties DEGI and ECPC Cyprus. 
 
It is hoped that all clearances will be received during this month to enable the 
remaining funds to be repaid to both parties. 
 
Market Overview 
 
This Shareholder Update only deals with Bulgaria as it remains the only country 
to which the Company has operating asset exposure. 
 
There are some early signs that the steep decline in the economy may be coming 
to an end.  It is too early to say that a recovery is underway but some 
macroeconomic indicators have marginally improved in Q1 10. 
 
After steadily increasing unemployment from 6.27% to 10.30% (Dec/2008-Feb/2010), 
initial data indicates that the unemployment in March 2010 decreased for the 
first time in the last 15 months down to 10.14%, low levels of inflation 
returned to the market in Q1 whereas 2009 was close to 0% and exports have 
increased marginally over the last two months. 
 
Bank lending rates have been slightly declining in Q1 and the government's 
finances, though experiencing budget deficits which were not typical for the 
past years, are in reasonable shape especially when compared to many other 
European countries. Government debt stood at 15.6% of GDP in February and 
foreign currency reserves were over 38% of GDP. 
 
 
 
Bulgaria-Retail Property 
 
As stated in the last report, market conditions in Bulgaria have remained very 
challenging throughout the period, and in line with many CEE markets have 
suffered from poor investor sentiment, and very restricted availability of bank 
debt finance. There has been no evidence of any improvement in capital markets 
since the last report and little real recovery is expected to be seen in the 
market until Q4 2011. 
 
Mall Veliko Turnovo 
 
Asset Overview 
 
The Company's one remaining property asset is a wholly owned interest in a 
single shopping centre, Mall Veliko Turnovo ('MVT') in central Bulgaria. 
 
As stated in the last report the impact of the worldwide economic downturn has 
meant that the retail-trading environment has continued to be very difficult in 
Bulgaria and the asset management strategy of MVT continues to be a defensive 
one. Consequently, to maintain acceptable levels of occupancy, ECPC has 
continued to renegotiate short term rental discounts to maintain occupancy 
levels. These renegotiations will mean that full year rental expectations will 
be 3% lower than anticipated. 
 
During the period a total of 644 sqm was vacated and two new tenants negotiated 
for and subsequently signed for a total area of 554 sqm.  Rental levels achieved 
were below the head line rents of the previous tenants but above the agreed 
short term discounted rents.  At the end of March 2010 occupancy stood at 14,898 
sqm or 92.6% of total leasable space. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 STRBCGDURUBBGGD 
 

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