Current report 11/2020 of 14 February 2020

Preliminary agreements to acquire BUMA Group’s properties

The Management Board of REINO Capital S.A. (“Issuer,” “Company”) hereby discloses the following inside information on the execution on 14 February 2020 by Luxembourg-based fund REINO RF CEE Real Estate S.C.A. SICAV-RAIF (“Fund”), formed as part of strategic collaboration between the Issuer and RF CorVal, of preliminary agreements to acquire a total of ten properties from Buma Group.

The parties to the six executed agreements are the Fund and special-purpose vehicles formed by the Issuer, which will become the property of the Fund prior to executing the final agreements.

Executing the preliminary agreements is the effect of negotiations held since July 2019 based on a letter of intent specifying the key rules for the acquisition of a holding being part of BUMA Group, as communicated by the Issuer via current report 27/2019.

The assets being acquired include office properties that are both generating income or at an advanced construction and commercialisation stage, with total GLA of more than 110 000 sqm, along with a land bank with capacity for office projects totalling more than 80 000 sqm GLA and residential projects with over 100 000 sqm of usable area.

The transaction which follows the letter of intent will also include a joint acquisition by the Issuer and RF CorVal of shares in all operating companies in the holding, including companies providing property-market services, general contractor services and property development project management services.

The total gross value of the acquired assets exceed PLN 1.3 billion.

The preliminary agreements stipulate that final agreements for the acquisition of the properties will be subject to agreements transferring shares in the companies forming the holding.

The preliminary agreements were executed on the condition precedent that the Fund would obtain approval from banks providing credit to the special-purpose vehicles for the acquisition (standard “change of control” procedure) and for the transfer onto the buyers rights attached to bonds and internal loans issued within Buma Group, and the release of collateral by the vendors. All of the above conditions are standard for this type of agreement.

The final agreements should be executed by 30 June 2020.

Risks related to the transaction are mitigated by a representations and warranties insurance and a property ownership insurance. Policies confirming this should be issued by 28 February 2020, failing which the buyers would have the right to withdraw from the preliminary agreements.

The Issuer and RF CorVal will be required to jointly pay a contractual penalty of EUR 1 million if the preliminary or final share sale agreement is not executed for reasons attributable to either of these entities. An equivalent of the contractual penalty is deposited, in equal proportion by the Issuer and RF CorVal, in a notary’s deposit account, and this deposit will be credit against the price for shares in the acquired companies. 

In line with the Issuer’s business policy, the acquired assets will be divided into sub-funds within the Fund, with various investment strategies: dividend, development, residential.

The assets being acquired from Buma Group will be managed by a company formed for this purpose, REINO RF Advisors Sp. z o.o., the formation of which was disclosed by the Issuer in current report 34/2019. 

The Issuer estimates that the total target gross value of the properties, once all projects from the acquired land bank, both office and residential, are completed in accordance with the existing market parameters, might exceed EUR 680 million. Together with properties being the subject of agreements executed by the Fund or its subsidiary in the preceding period, the target gross value should reach EUR 750 million.

Taking the above into account as well as best knowledge of the remaining circumstances and business arrangements, it can be assumed that total revenue related to management advisory and asset management by companies owned by the Issuer’s group and RF CorVal that can be generated in three years from the final agreements for Buma’s assets being executed, without one-off success fees, can exceed PLN 90 million. The share of REINO Partners, a subsidiary of the Issuer, in this amount should reach not less than PLN 54-60 million.

The Issuer considered this information as confidential due to the transaction’s crucial meaning for the development of the Issuer’s group of companies providing property-market services, including companies specialising in asset management and management advisory, both from the viewpoint of developing the business of these companies and the investment vehicles the assets of which are or can be managed by companies from the Issuer’s group, as well as the potential scale of revenue to be generated based on agreements being the outcome of this transaction.

Legal basis:

Art. 17 sec. 1 MAR – inside information.

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REINO Capital is a listed holding company that owns a group of entities engaged in investments and fund management on the commercial property market.

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