ERG Capital REITs sell property portfolios for EUR 27m
ERG Capital 1 and ERG Capital 2, the real estate investment trusts (REITs) of Bulgarian American Credit Bank (BACB), have clinched a deal to sell their entire property portfolios for EUR 27 million combined, the companies said in a disclosure to the Bulgarian Stock Exchange (BSE).
If the deal is implemented, each fund could earn a profit of BGN 14 million that will be distributed among shareholders in line with statutory rules for REITs operating on the Bulgarian market.
The REITs have signed preliminary accords with an unnamed foreign investor and a number of conditions need to be fulfilled to sign the final agreements. One of the conditions includes whether the tenant of two of the Praktiker buildings will exercise its the right of first refusal and commit to buy the properties under conditions no worse than the negotiated. Furthermore, the buyer should successfully carry out due diligence within two months after a potential refusal by Praktiker.
Praktiker declined to comment at this stage.
If all conditions are fulfilled payment should be made within four months.
The news sent the two REITs shares on the Bulgarian bourse skyrocketing, with ERG Capital 1 rallying 37% to BGN 3.56 and ERG Capital 2 shooting up just over 47% to BGN 3.9 apiece. Before that investors valued them at BGN 17 million put together, which is lower than the balance sheet value of their properties estimated at BGN 23.7 million.