» Update on Investments

Update on Investments

Posted on: 6 June 2012

The purpose of this announcement is to advise shareholders of various agreements which NEPI has concluded and provide an update regarding Victoria City Centre and other investment opportunities.

Vulcan Transaction

NEPI has through its wholly-owned subsidiary, NE Property Cooperatief U.A. (“NEPC”), concluded a shareholders’ agreement with Mr Michael Topolinski and a Romanian special purpose vehicle Zircon Properties SRL (“Zircon”) in terms of which NEPC and Mr Topolinski agreed to jointly acquire a plot of land in Bucharest via Zircon (“the Vulcan transaction”).

Zircon is in the process of acquiring a 78,330 square metre plot of land in Rahova, Bucharest from Balkam Petroleum SA (“the land acquisition”). NEPC entered into the Vulcan transaction with the intention to develop a strip mall anchored by a hypermarket and several other international value brands (“the proposed Vulcan development”). The site is a former factory site and is located in a densely populated area of Bucharest which has good vehicular and public transport access.

The proposed land acquisition is conditional on the issue of a local zoning plan (known as a PUZ) to be obtained by Balkan Petroleum SA.

NEPC and Mr Topolinski have agreed to advance, in aggregate, between EUR15 million and EUR20 million to Zircon to settle the land acquisition price and pre-development costs and will seek to raise bank finance for the balance of the costs associated with the proposed Vulcan development. NEPC's final shareholding in Zircon will be determined formulaically based on the amount of capital contributed by NEPC’s co-developer, Mr Topolinski and NEPC’s shareholding in Zircon could potentially increase from its current minimum of 50% up to a maximum shareholding of 95%.

Discussions with prospective tenants who will occupy the completed strip mall are advancing well.

The Vulcan transaction is not categorisable in terms of the Listings Requirements of the JSE Limited and the announcement of this transaction is made for information purposes. Further announcements in relation to the proposed Vulcan development will be made as and when appropriate.

Buy-and-Leaseback Transaction with Mobexpert and Potential Redevelopment

Shareholders were advised in NEPI’s annual report for the year ended 31 December 2011 that NEPI was in the process of finalising a due diligence with regards to a buy-and-leaseback transaction with Mobexpert, the leading Romanian furniture retailer, in relation to its retail asset situated in Brasov, Romania. NEPI is pleased to advise that it has completed the acquisition of the retail box and excess land from Mobexpertand has concluded a lease agreement with Mobexpertfor the retail box.

In terms of the lease agreement, NEPI has an option to relocate Mobexpert, should a re-development of the site be undertaken. NEPI is currently in negotiations with Carrefour(the world’s second largest retail group) to combine the assets acquired from Mobexpert with those of the adjoining Carrefour hypermarket and to redevelop these assets into a regional mall. Broad commercial terms have been agreed between Carrefour and NEPI regarding a redevelopment, but the re-development would be subject to, amongst other things, approvals being received from the boards of Carrefour and NEPI and detailed transaction documents.

The buy-and-leaseback transaction with Mobexpertis not categorisable in terms of the Listings Requirements of the JSE Limited and the announcement of this transaction is made for information purposes. Further announcements in relation to any proposed re-development will be made as and when appropriate.

Update Regarding Victoria City Centre

Shareholders are referred to the previous announcements released on 17 November 2011, 20 December 2011 and 1 March 2012 in terms of which NEPI advised that it had, through NEPC, acquired a 50% shareholding in a development company S.C. Axa CD Real Estate Development S.R.L. (“the development company”) with the intention to participate in a proposed development of a shopping centre in Bucharest known as Victoria City Centre (“the proposed Victoria City Centre development”).

The proposed Victoria City Centre development was subject to, inter alia, the shareholders of the development company being NEPC, Kitma Holdings Limited (“Kitma”) and Grenoui Holdings Limited (“Grenoui”) approving a project development plan together with Alpha Bank, which initially funded the acquisition of the land plot by Kitma and Grenoui. NEPC was not able to agree such a development plan with Kitma and Grenoui and has consequently decided to withdraw from the proposed Victoria City Centre development. NEPC has received the remaining EUR 4,875,898.99 of the EUR5 million it placed on escrow with Alpha Bank and will transfer the shares in the development company to Kitma and Grenoui once the balance of its funds has been refunded by these parties.

Other Opportunities

NEPI is exploring a number of other investment and development opportunities in Romania and in other countries in the region. As and when appropriate, further announcements will be made in this regard.