Romanian architect-turned-entrepreneur Dinu Patriciu became a major player in the consolidation of the London-listed overseas property companies this morning by launching a bid to take over Rutley European and buying a 29.9% stake in Deutsche Land.
Patriciu's Black Sea Global Properties, which in April kickstarted its European property expansion by completing the €50.8m takeover of AIM-listed Fabian Romania, has made a £12.56m cash bid for Rutley European and subscribed for 94.9m shares in Deutsche Land as part of a wider placing of shares by the AIM-listed German investor.
Black Sea, whose interest in Rutley European was revealed in Property Week (24.04.09), is offering 6p a share in cash for Rutley European, the listed fund, which is managed by Knight Frank's private equity arm, Rutley Capital Partners. This attributes an enterprise value to Rutley European of £446.6m, which includes its net debt of £434m.
'We are launching this offer at a time of ongoing uncertainty in European real estate markets,’ said Patriciu. ‘Our offer is designed to accommodate those shareholders who are seeking a cash exit as well as those who wish to remain invested.
Assuming we achieve control of Rutley via the offer, we intend to stabilise the company's financial position and take other measures to improve the company's performance.'
Offer below current price
The offer is more than double the 2.9p price at which Rutley European's shares were trading before it said it had received approaches on 27 March. However, it is below the current 6.88p share price of Rutley European and reflects a discount of 87% to 45p a share net asset value at 31 March.
Black Sea only owns 0.1% of Rutley European’s shares and has not revealed any acceptances for its offer from the company’s shareholders.
It could face a bid from a rival party. Last November Rutley European's board, chaired by David Pinckney, effectively put the company on the market, when it said it had asked Cenkos 'to provide strategic advice on the options available to the company and is considering the alternative uses of present and future cash reserves'.
The reason for the sale was the wide discount to net asset value at which the shares were trading and the lack of liquidity in the shares.
Six parties interested
It is thought the process has so far attracted around six interested parties.
Rutley European’s portfolio comprises 56 properties across continental Europe with a value of €585 million as at 31 December 2008.
Black Sea has also bought 94.9m shares in Deutsche Land at 12p each for a total of £11.4m. It has become the company’s largest shareholder and plans to invest a further £20m in the company in order to strengthen its balance sheet.
Black Sea is wholly owned by Patriciu's RPH, which has more than $1bn (£664m) of assets, which it either owns or manages, across Europe.
Together with his brother, Patriciu developed the first sites in Romania for large retail chains, among them Billa and Minimax.
Patriciu is developing, together with Immorent, a 1.6m sq ft office and residential project in the north of Bucharest, known as Smart City.