| | POLISH FINANCIAL SUPERVISION AUTHORITY | | | | | | | UNI - EN REPORT No | 15 | / | 2016 | | | | | | Date of issue: | 2016-05-18 | | | | | | | | | | | Short name of the issuer | | | | | | | | | | PLAZA CENTERS N.V. | | | | Subject | | | | | | | | | | | | | FIRST QUARTER INTERIM MANAGEMENT STATEMENT AND INTERIM FINANCIAL INFORMATION | | | | Official market - legal basis | | | | | | | | | Inne uregulowania | | | | Unofficial market - legal basis | | | | | | | | Contents of the report: | | | | | | | | | | | STABLE PERFORMANCE RECORDED IN CORE PORTFOLIO AND FURTHER STRATEGY PROGRESSPlaza Centers N.V. _LSE: PLAZ_ _“Plaza" / the “Company" / the “Group"_, a leading emerging markets property developer, today announces its interim management statement relating to the period from 1 January 2016 to 31 March 2016 _the “Period"_ and unaudited interim financial information for the three month period ended 31 March 2016, together with an update on transactional activity to the date of this announcement.
Stable performance at core CEE shopping centres during the Period:
• Like-for-like portfolio occupancy up almost 2% to 95.92%, compared to 94% in Q1 2015.
o Turnover at Riga Plaza, Latvia, was up by 6.2% compared to the first quarter of 2015, while footfall also increased on a like-for-like basis by 1.3% and occupancy remained stable at 97% _2015: 96.1%_. This stabilised positive performance and the prospect of further potential has enabled its sale after the period end, as detailed below.
o Turnover at Suwalki Plaza, Poland, was significantly up by 11%, while footfall increased by 7%, versus the first quarter of 2015. Occupancy remains high _95.4% compared to 99.2% in Q1 2015_ despite a number of lease expiries, and negotiations are currently underway with a number of existing and prospective new tenants, the successful conclusion of which should result in close to 100% occupancy again in the near future.
o At Torun Plaza, Poland, occupancy increased to 94.08% _2015: 92.81%_ due to a number of new leases being signed, including with fashion retailer Sizeer, bookstore Swiat Książki and tour operator Rainbow. Further to this, an additional 600 sqm has been leased by existing tenants, Reserved and CCC, both of which are expanding their stores. Despite this positive letting activity, turnover at the shopping centre decreased by 8% compared to the same period, while like-for-like footfall was down by 7%, as a reduced number of shops were trading due to refurbishment works and the fit-out of units for new tenants. Most of these works were complete by the reporting date and the Company expects footfall and turnover improvement in the next quarter and leading up to the year end.
o Turnover at Zgorzelec Plaza, Poland, was up significantly, increasing by 11% on a like-for-like basis. Footfall at the centre has risen by 6% while occupancy remained stable at 89%.
Portfolio activity during and after the Period:
Disposals to the total value of circa €120 million have been undertaken by the Company on or since 31 March 2016.
The Company completed the sale of its subsidiary holding, Liberec Plaza, a shopping and entertainment centre in the Czech Republic, on 31 March 2015 for €9.5 million. Following net asset value adjustments related to the subsidiary’s balance sheet, the Company received net €9.37 million.
The majority of the proceeds from the sale _€8.5 million, reflecting 100% of the outstanding loan_ was repaid to Plaza Centers Enterprises B.V. _“PCE"_, a wholly owned subsidiary of Plaza, on account of the bank loan PCE acquired in September 2015 _the bank loan was provided to the SPV, the holding and operating company of Liberec Plaza_. At least 75% of the remaining net proceeds will be distributed to the Company’s bondholders by the end of June 2016, in line with the Company’s stated restructuring plan.
Plaza acquired the loan to the holding and operating company for Liberec Plaza at a circa 58% discount in October 2015 and, since then, the Company has benefitted from free cash arising from the asset’s income, as well as the release of restricted cash of approximately €700,000. Almost €1 million of surplus cash flow was delivered by the disposal, after the settlement of the loan.
As announced on 8 April 2016, Plaza has signed a binding pre-agreement to sell a 15,000 sqm development plot in Piraeus, near Athens, Greece, for €4.7 million. The sale agreement with a third party developer is subject to certain conditions being met, including due diligence which has up to six months to complete. The purchaser has provided a corporate guarantee to secure the transaction for 10% of the consideration. A building permit for the land was received in 2009 for the construction of a shopping centre but, due to market conditions, the strategic decision was taken by Plaza not to proceed with the project. Upon completion of the disposal, in line with the Company’s stated restructuring plan, 75% of the net cash proceeds will be distributed to Plaza’s bondholders.
As announced on 16 May 2016, a subsidiary of Plaza, in which the Company has a 50% stake, entered into a business sale agreement with respect to the disposal of Riga Plaza shopping and entertainment centre in Riga, Latvia, to a global investment fund. The agreement reflects a value for the business of circa €93.4 million _reflecting 100% of the asset value_, which is in line with the last reported book value. In line with the Company’s stated restructuring plan, 75% of the net cash proceeds from Plaza’s share of the sale of the business _expected to be circa €19 million, following the repayment of the bank loan associated with the business of circa €55 million _reflecting 100%__, will be distributed to Plaza’s bondholders within the quarter following the closing. The closing of the transaction is subject to several conditions precedent, all of which are expected to be fulfilled in the coming months.
Finally, since the period end, Plaza has also undertaken the sale of its wholly owned subsidiary which holds the “MUP" plot and related real estate in Belgrade, Serbia, for €15.9 million, well above the last reported book value of circa €13.5 million. In addition to the €15.9 million transaction consideration, Plaza will also be entitled to an additional pending payment of €600,000 once the purchaser successfully develops at least 69,000 sqm above ground. Upon the receipt of each stage payment, in line with the Company’s stated restructuring plan, 75% of the net cash proceeds will be distributed to Plaza’s bondholders in the following quarter.
In terms of active development projects, construction of Belgrade Plaza _Visnjicka_ is progressing well and is on schedule. With more than a year to go until the planned opening of the shopping centre, Plaza is experiencing strong tenant demand. 48% of the shopping centre is now pre-let or heads of terms have been signed, with international retailers like H&M and Inditex.
The current consolidated cash balance of the Company is circa €20 million, including approximately €6.1 million of restricted cash mainly held in the operating shopping centres.
Management changes
Plaza announces today that Yitshak _Izzie_ Elias has stepped down as Chief Financial Officer for personal reasons and that, from 1 June 2016, Eitan Farkas, Plaza’s Chief Controller for the past 14 years, will take on the responsibilities of the position as Finance Director.
Dori Keren, Acting Chief Executive Officer of Plaza Centers N.V., said:
“The activity we have undertaken in the first quarter emphasises the continued progress being made by Plaza with regard to the Company’s restructuring plan. The skilled asset management being carried out by our teams at the sites is paving the way for further improvement and future sales of yielding assets, while the development projects with potential that is most in line with our strategic objectives are also being progressed. Meanwhile, we have focused on repositioning the portfolio through the disposal of certain non-core or mature assets, as evidenced by the agreements since the year end to sell our development plot in Piraeus in Greece, as well as Liberec Plaza in the Czech Republic, Riga Plaza in Latvia and the MUP site in Belgrade.
“Our ongoing strategy has helped to reduce our debt levels, significantly curtail losses and means we can also focus on bringing our development projects on line. As asset sales complete we are continuing to meet our restructuring plan commitments by making payments to bondholders while at the same creating long term value for shareholders."
Further information can be found about the results for the three month period ending on 31 March 2016 on the Company’s website:
http://www.plazacenters.com/index.php?p=company_presentationFor further details please contact:
Plaza Centers N.V.
Dori Keren, Acting Chief Executive Officer
+48 22 231 99 00
FTI Consulting
Dido Laurimore / Claire Turvey / Tom Gough
+44 20 3727 1000Plaza Centers N.V. _www.plazacenters.com_ is a leading emerging markets developer of shopping and entertainment centres with operations in Central and Eastern Europe and India. It focuses on constructing new centres and, where there is significant redevelopment potential, redeveloping existing centres in both capital cities and important regional centres. The Company is listed on the Main Board of the London Stock Exchange, the Warsaw Stock Exchange and, as of 27 November 2014, the Tel Aviv Stock Exchange _LSE:"PLAZ"; WSE: “PLZ/PLAZACNTR"; TASE: “PLAZ"_. Plaza Centers N.V. is an indirect subsidiary of Elbit Imaging Ltd. _“EI"_, an Israeli public company whose shares are traded on both the Tel Aviv Stock Exchange in Israel and the NASDAQ Global Market in the United States. It has been active in real estate development in emerging markets for over 20 years.
Forward-looking statements
This press release may contain forward-looking statements with respect to Plaza Centers N.V. future _financial_ performance and position. Such statements are based on current expectations, estimates and projections of Plaza Centers N.V. and information currently available to the company. Plaza Centers N.V. cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. Plaza Centers N.V. has no obligation to update the statements contained in this press release, unless required by law.
 
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