Secondary Private Placing 2 Important Information - Disclaimer

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Secondary Private Placing 2 Important Information - Disclaimer

  1. 1. Secondary Private Placing
  2. 2. Important Information - Disclaimer <ul><li>The information in this presentation, which does not purport to be comprehensive, has been provided by Dragon – Ukrainian Properties & Development Plc (the “Company”) and has not been independently verified. Neither the Company nor any of its directors, officers, employees and agents make any representation or warranty, express or implied, as to the accuracy or completeness of this memorandum or any other written or oral information transmitted or made available to a prospective investor. In particular, no representation or warranty is given as to the achievement or reasonableness of any future projections, management estimates, prospects or returns. The only representations that will be made are those that may eventually be included in placing letters or other definitive subscription agreements relating to the proposed investment. The recipient of this memorandum is responsible for conducting its own investigation of the Company and the other information contained in this memorandum. </li></ul><ul><li>This Document and any other documents, statements or information provided in conjunction with this Document (collectively called the “Presentation”) contains confidential and proprietary information of the Company and is provided to the recipient in confidence and solely for the purpose of evaluating the business affairs and plans of the Company. By accepting this memorandum the recipient agrees that it will not disclose any of the information contained in the Presentation and agrees that it will not use or pursue, or allow others to use or pursue any of the confidential information, prospects, strategies, proposals or opportunities disclosed to it in the Presentation, except those which were already demonstrably known to it or already demonstrably in the public domain. Except with the specific consent of the Company, you may not duplicate or permit or acquiesce in the duplication of the Presentation in any way. At the request of the Company you will return the Presentation to the Company and deliver and/or confirm to the satisfaction of the Company the destruction of all copies, summaries, extracts, and evaluations of the Presentation and the information contained therein, no matter in what form. </li></ul><ul><li>Neither the Company nor any of its directors, officers, employees and agents undertakes any obligation to provide the recipient of this presentation with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in this presentation or any additional information which may become apparent. The issue of this presentation shall not be taken as any form of commitment on the part of the Company to proceed with any transaction. </li></ul><ul><li>This document and its contents are confidential and are only directed at persons who fall within the exemptions contained in Articles 19 and 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (such as persons who are authorised or exempt persons within the meaning of the Financial Services and Markets Act 2000, as amended, and certain other investment professionals, high net worth companies, unincorporated associations or partnerships and the trustees of high value trusts) and persons who are otherwise permitted by law to receive it. This document and its contents are directed only at persons having professional experience in matters relating to investments and any investment or investment activity to which this document relates is only available to such persons. Persons of any other description, including those who do not have professional experience in matters relating to investments, should not rely on this document or act upon its contents. </li></ul><ul><li>Recipients of this memorandum in jurisdictions outside the United Kingdom should inform themselves about and observe all applicable legal requirements. </li></ul><ul><li>Neither this document nor any copy of it may be taken or transmitted into the United States of America, its territories or possessions (the &quot;United States&quot;) or distributed in the United States or to any national or resident thereof or any corporation, partnership or other entity created or organised under the laws thereof, save pursuant to an exemption from the registration requirements of the US Securities Act of 1933 as amended. Neither this document nor any copy of it may be taken or transmitted into Canada, or distributed or re-distributed in Canada or to any individual outside Canada who is a resident of Canada. Neither this document nor any copy hereof should be distributed in Japan or to any resident thereof for the purpose of solicitation of subscription or offer for sale of any securities or in the context where the distribution hereof may be construed as such solicitation or offer. Any failure to comply with this restriction may constitute a violation of United States, Canadian or Japanese securities laws. </li></ul>1
  3. 3. <ul><li>Investment Manager </li></ul><ul><li>NOMAD & Broker </li></ul><ul><li>Placing agent </li></ul><ul><li>Legal Advisor, UK </li></ul><ul><li>Legal/Tax Advisor, Ukraine, IOM </li></ul><ul><li>Administrator & Co. Secretary </li></ul><ul><li>Reporting Accountant (IPO) </li></ul><ul><li>Financial Auditor </li></ul>Key Facts Zimmerman Adams International <ul><li>Established in February, 2007 as a public company in the Isle of Man </li></ul><ul><li>Raised $208 million on June 1 st 2007, via an IPO on AIM </li></ul><ul><li>Committed $172.5 million in 5 investments within three and a half months from IPO </li></ul><ul><li>Existing investors in the Company include some of the world’s best-known investment banks and investment funds </li></ul><ul><li>Board with considerable experience in the real estate, general management and investment management industries </li></ul><ul><li>The investment manager, Dragon Capital Partners is a subsidiary of Dragon Capital – a leading investment bank in Ukraine. </li></ul>2
  4. 4. Offering <ul><li>Size : Seeking USD 100 million of new capital via a second private placing to fund new investment opportunities in the development of commercial properties and large-scale residential projects in Ukraine. </li></ul><ul><li>Pricing: Priced at the average price of DUPD shares over the last 20 trading days prior to closing of the book (expected by Nov 5 th ), but capped within the range of GBP 1.30 (minimum) and GBP 1.35 (maximum). </li></ul>3
  5. 5. Investment Strategy <ul><li>Development of new commercial properties as well as redevelopment of existing properties in Ukraine, offering the prospect of attractive returns to our shareholders. </li></ul><ul><li>Investment focus on development of new and re-development of existing properties in the retail and office sectors and, to a lesser extent, in industrial and warehousing sectors. </li></ul><ul><li>Consideration of opportunities to acquire land plots that the Directors consider to be suitable for development of commercial properties or large-scale residential projects (“land banking”). </li></ul><ul><li>Initial focus on Kiev and Kiev oblast areas, as well as other major regional centers of Ukraine with significant population. </li></ul><ul><li>The Directors believe that, amongst other investment options, opportunities to enter into sale-and-leaseback arrangements may arise as a result of substantial growth in the Ukrainian retail market. </li></ul>4
  6. 6. Market Opportunity <ul><li>High yields relative to other Western, Central and Eastern European markets are currently available in the Ukrainian property market. </li></ul><ul><li>The Directors believe sale-and-leaseback arrangements will provide an alternative source of capital to Ukrainian retailers, who predominantly own their real estate assets and have limited access to efficient debt financing instruments. </li></ul><ul><li>Over the mid to longer term, the Ukrainian real estate market is likely to experience yield compression, mirroring the trend in other Central and Eastern European countries. The Directors believe this will be reflected in a gradual increase in the asset value of existing properties. </li></ul><ul><li>The Directors believe relatively high prime rental rates in Kiev, across all asset types, will be sustained due to a substantial deficit in quality properties. </li></ul>Source: Knight Frank, DTZ, Dragon Capital estimates Source: DTZ 5
  7. 7. Market Opportunity <ul><li>In the short and medium term, demand for high-quality retail, office and warehouse space should continue to exceed supply as the country’s economy develops. Quality stock is limited and the substantial expansion of retail trade will exert strong upward pressure on rent levels. </li></ul><ul><li>The growth in demand for quality space justifies the substantial pipeline of development projects currently in place, however the pipeline still lags behind the levels of most Central European countries, by 2 to 3 times, depending on the type of property. </li></ul>Source: DTZ, Colliers Source: DTZ, Colliers 6
  8. 8. Market Opportunity <ul><li>Rental rates and land prices for commercial property have appreciated during the last several years. </li></ul><ul><li>The Directors believe that the development of the Ukrainian market will result in a higher number of globally recognized companies entering the country which, in turn, will create a substantial quality tenant base. </li></ul><ul><li>The practice of rental payments being predominantly denominated in US dollars alleviates the FX risk factor. </li></ul>Source: Colliers Source: DTZ 7
  9. 9. Committed Capital $ 172.5m committed in total Since the IPO, in June 2007, the Company has been able to secure and execute several investments for DUPD encompassing most key segments of our investment focus. While maintaining a very strong culture of selectivity in pursuing investments, DUPD is currently working towards finalization of several more transactions in residential and retail sectors, to deploy the remaining investment capital. 8
  10. 10. Projects under Development Sector: Retail Location: Regional centers of Ukraine Current status: 1 shopping center under construction Land title: Freehold /Leasehold Gross Area: 89,600 sq.m Total Commitment: US$ 12,000,000 Shareholding: 38% Estimated completion date: Late-2009 Henryland Group Limited The project entails acquisition of a 4.27 hectare land plot in Odessa with subsequent construction of a 17,000 sq. m real estate asset, attainment of land lease rights to a 4 hectare land plot in Kremenchug with subsequent construction of a 15,000 sq. m retail commercial facility, acquisition of a 12,312 sq. m real estate asset in Lutsk and acquisition of 3 additional land plots in regional centers of Ukraine and further development of retail shopping centers on those land plots. Following the completion of each facility, Nova Liniya, a leading DIY retailer in Ukraine, will lease a substantial part of the premises under long-term lease agreements. Upon completion of all the 6 facilities (envisaged during late 2009), DUPD intends to facilitate its exit from the investment through trade sale of the real estate holding company to a 3rd party property investor. The Directors believe that the relatively short period of the investment substantially increases potential investor’s returns on the project while assuming a very low-risk profile given the availability of an anchor tenant for all locations. 9
  11. 11. Projects under Development (cont.) Pine Forest Riverside Estates Sector: Residential Location: Kyiv suburbs Current status: Under construction Land title: Freehold Land Area: 6.33 hectares Total Commitment: US$ 9,000,000 Shareholding: 50.3% Estimated completion date: Mid-2009 Pine Forest Riverside Estates The project entails attainment of ownership rights to a 6.33 hectare land plot located in a picturesque area near the Kyiv Sea with access to Desna and Dnepr rivers, with subsequent development of a gated community comprising up to 100 cottages and town-houses. The development will be performed jointly with the owners of an adjacent 6.25 hectare land plot. The share of DUPD in the greater Project (both land plots) will represent 50.3%. This proportion will be used to share utility and infrastructure costs (gas, electricity, roads, and common facilities) with the owners of the adjacent land plot. The Directors believe that the location of the Project, coupled with increasing demand for quality suburban housing in the Ukrainian market and adequate social infrastructure of the Project, provides comfort on this investment. The Project is currently in an early stage of construction, with the initial permits being received, and it is scheduled for completion by mid-2009. 10
  12. 12. Projects under Development (cont.) Komarova Shopping Center Sector: Retail Location: Kyiv Current status: Concept development Land title: Leasehold Land Area: 1.2 hectares Total Commitment: US$ 10,750,000 Shareholding: 50%+1 share Estimated completion date: Late 2009 Komarova project is a greenfield development of a community shopping centre with a total area of ca. 45,000 sqm in Borschahivka, a large residential district on the right-bank in Kyiv. The leased and properly zoned land plot of 1.2 ha is located on Komarova ave., an intensive city thoroughfare connecting the district with the city center. The project will consist of two retail levels and one entertainment level and will be the first quality shopping centre in the area. DUPD has agreed to purchase 50%+1 share of the project in August 2007 by forming a Cypriot-based joint venture with Tiko Construction, a leading local developer of retail and office schemes. The architectural concept is currently under development. Once design documentation is produced and approved, construction is aimed to commence in spring 2008. The scheme is planned to be mostly let to class-A retailers prior to completion in autumn 2009, and sold to a property investor shortly after opening. 11
  13. 13. Projects under Development (cont.) Land Banking Sector: Residential/Commercial Location: Kyiv region Current status: Land acquisition in progress Land title: Freehold Land Area: up to 675 hectares Total Commitment: US$ 140,750,000 Shareholding: 85% Estimated completion date: Mid 2008 Land banking projects aiming at acquisition of substantial land fields, which offer development potential for large-scale residential projects. Under our land banking activities, we have committed to acquire up to 675 hectares of land in two locations in the Kyiv region, which offer development prospects for residential and commercial projects. Aggregation of the land holdings is generally a long process due to the large number of land plots involved. Therefore, we expect to finalize the acquisition and consolidation effort during the last quarter of 2007. After consolidation, the intention of Directors is that these enlarged land plots will be re-zoned to allow for construction of residential and commercial structures. After re-zoning, and in line with current market prices of converted land in comparable areas, the Directors expect to realise a significant upside on the value of our land holdings. 12
  14. 14. Pipeline Summary * These figures represent asking prices, indicated in the relevant investment proposals. 13
  15. 15. Pipeline Summary * These figures are only estimates and have been arrived at using a calculation which is broadly based on the asking price indicated in the relevant investment proposals, aggregated with the fair market construction costs per sqm by gross area of the project, and assuming approximately 60% debt leverage of total project costs (which includes working capital requirements) where applicable and DUPD's share in the project. Whilst this forms the general basis for calculation, individual transactions may be subject to variations in both the formula used for calculation and the percentage of debt leverage. (Continuation) 14
  16. 16. Pipeline Summary Total Floorplate: 2,249,562 sq. m. Total Land Area: 4,920 hectares Total Equity Requirement: $ 1,244,020,000 Kyiv + Kyiv Region: 88% Other Regions: 12% Breakdown by Volume Breakdown of DUPD Equity by Segment Breakdown of DUPD Equity by Location 15
  17. 17. <ul><li>Brokerage fee: </li></ul><ul><li>1% of the subscription amount </li></ul><ul><li>GBP 50,000 fee to the Nomad and Broker </li></ul><ul><li>Management fee: </li></ul><ul><li>1.5% of on-going Gross Asset Value. </li></ul><ul><li>(paid in cash, semi annually and pro-rated per additional funds raised) </li></ul><ul><li>Annual Performance Fee: </li></ul><ul><li>20% of profits in excess of 10% growth in annual Net Asset Value per share. </li></ul><ul><li>25% of profits in excess of 35% growth in annual Net Asset Value per share. </li></ul><ul><li>(paid 30% in cash, 70% in newly issued ordinary shares of the Company, annually) </li></ul><ul><li>Additional funds are treated as a separate asset pool during the accounting period in which such funds are raised </li></ul><ul><li>Warrant Instrument: </li></ul><ul><li>The Investment Manager receives the right to acquire up to 5% of total shares issued by the Company in the secondary placement, exercisable at any time during the next 5 years period from placement, at the placement price. </li></ul>Financial Structure 16
  18. 18. Sponsor & Investment Manager <ul><li>DUPD has engaged Dragon Capital Partners Limited (“DCP”) to lead investment management. DCP is an affiliate of Dragon Capital, a leading Ukrainian financial institution specialising in the provision of investment banking, securities trading, asset management and private equity services. Dragon Capital received the “Best Equities House in Ukraine” award in 2002, 2004, 2005, 2006 and 2007 from Euromoney, a leading financial journal. </li></ul><ul><li>The management team possesses substantial expertise in the Ukrainian investment market across a wide spectrum of industry sectors, but more importantly, in the local real estate market. The management team’s track record and sector know-how allows it to make investments that it believes will create substantial shareholder value. </li></ul><ul><li>Thanks to the extensive track record of Dragon Capital, which includes many investments in various segments of the Ukrainian real estate market, DCP enjoys access to a network of contacts comprising Tier-1 organizations engaged in real estate, some of the industry’s professionals and successful entrepreneurs, as well as various governmental agencies involved in the permitting stage of development projects. </li></ul>17
  19. 19. Dragon Capital Partners – The Manager <ul><li>Chris Kamtsios – Managing Partner </li></ul><ul><ul><li>14 years of experience in the investment industry. </li></ul></ul><ul><ul><li>Former Director of Investments responsible for Russia and Ukraine at Commercial Capital Group, the private equity arm of Commercial Bank of Greece. </li></ul></ul><ul><ul><li>Former Managing Partner at Ineko Capital Partners LLP - Ukrainian private equity group. </li></ul></ul><ul><ul><li>Former Senior Associate at JPMorgan Chase (leveraged buyout division) </li></ul></ul><ul><ul><li>Served on the Board of Directors in 6 Eastern European companies active in the food processing, restaurant chains, distribution of FMCG, construction materials, real estate and transportation industries </li></ul></ul><ul><li>Volodymyr Tymochko – Director - Investments </li></ul><ul><ul><li>4 years of experience in the real estate industry. </li></ul></ul><ul><ul><li>Former Associate Director in charge of investment services at Colliers Ukraine. </li></ul></ul><ul><ul><li>Advised the development of over 20 large shopping centres, business centres and mixed-use projects in Kyiv and regions of Ukraine </li></ul></ul><ul><li>Eugene Baranov – Director - Investments </li></ul><ul><ul><li>6 years of experience in the investment industry. </li></ul></ul><ul><ul><li>Former Director of Investments at Ineko Capital Partners LLP. </li></ul></ul><ul><ul><li>Served on the Board of Directors of 5 Ukrainian companies active in real estate, FMCG, construction materials and oil & gas. </li></ul></ul>18
  20. 20. <ul><li>Oleg Kurinnoy – Director – Development </li></ul><ul><ul><li>over 7 years of experience in the investment industry with Dragon Capital with focus on real estate investments. </li></ul></ul><ul><ul><li>Director of Dragon Development. </li></ul></ul><ul><ul><li>Member of the Board of Directors of 3 Ukrainian companies active in real estate, DIY retail and machine building. </li></ul></ul><ul><li>Denis Vaschenko – Director - Project Management </li></ul><ul><ul><li>10 years of experience in the real estate industry </li></ul></ul><ul><ul><li>Former Project Manager at “Black Sea Investment Group” – a leading RE developer in Kiev. </li></ul></ul><ul><ul><li>Former director of “Finprofil” Ltd. construction company. </li></ul></ul><ul><li>Oleg Laska – Chief Financial Officer </li></ul><ul><ul><li>9 years of experience in corporate finance and financial management of enterprises. </li></ul></ul><ul><ul><li>Former CFO in several leading Ukrainian industrial enterprises. </li></ul></ul>Dragon Capital Partners – The Manager 19
  21. 21. <ul><li>Aloysius Wilhelmus Johaness van der Heijden – Chairman of the Board </li></ul><ul><li>Mr. van der Heijden has worked in the real estate industry for 29 years, a large part of which he spent as a General Director of Beheer Brouwershoff Amsterdam B.V., a private investment company of Drs. C. van Zadelhoff with a core business in capital investment, predominantly in real estate and also commercial real estate brokerage and advisory services. Currently, he is a non-executive partner of DTZ Zadelhoff (The Netherlands), Supervisory Board member of DTZ Zadelhoff Tie Leung Central & Eastern Europe and N.V. &quot;Het Havengebouw&quot;. </li></ul><ul><li>Fredrik Svinhufvud – Non Executive Director </li></ul><ul><li>Fredrik Svinhufvud is currently managing director of Malka Oil AB, a Swedish oil company concentrating on oil and gas production in western Siberia in Russia. Previously he was managing director of Tetra Pak Ukraine for six years. Federick has held several international positions within the oil field services industry, initially with Schlumberger Ltd in South America, Atlas Copco in North America and the Geco Well Services in the North Sea. Later he held positions within sales and marketing in the agriculture supply industry (Trelleborg AB). In March 2006 Fredrik was elected the President of the European Business Association in Ukraine. </li></ul><ul><li>Tomas Fiala – Non Executive Director </li></ul><ul><li>Mr. Fiala has been the principal shareholder and managing director of Dragon Capital, a Kyiv-based investment bank, since April 2000. Prior to establishing Dragon Capital, Mr. Fiala served as senior executive for five years at Wood & Company, a leading investment bank in the Central Eastern Europe region. Mr. Fiala is currently serving as chairman of the supervisory board of KMZ, Ukraine's leading agricultural equipment producer, a member of the Supervisory Board of Nova Liniya, the largest DIY supermarket chain in Ukraine, Cantik Enterprises Limited, a Ukrainian retail real estate development company, Retail Group, one of the largest food retailers in Ukraine, Ukrinbank as well as KP Media, a leading Ukrainian media holding. </li></ul>The Company – Board of Directors 20
  22. 22. The Company – Board of Directors Boris Erenburg - Non Executive Director Boris Erenburg manages investments for the Spinnaker Capital Group, an emerging markets hedge fund manager with $6.5bn under management. Prior to Spinnaker, he co-managed Pactual Electra, a Brazilian middle market private equity firm with US$160 million in investments, and was a board member of portfolio companies in the technology and business services sectors. He started his career at IFC (World Bank Group) in Washington DC where he structured project and corporate finance transactions in the oil and gas industry, and then in Argentina where he was the deputy representative for the Southern Cone responsible for new business and the investment portfolio in Argentina, Bolivia, Chile, Uruguay and Paraguay. 21
  23. 23. Special Advisor to the Board James Morton – Special Advisor to the Board Mr. Morton has been an advisor to the Cundill Group since 1996.  In 2006, Mr. Morton became the Chief Investment Officer of the group’s CIM Investment management Ltd.  From 1996 - 2006, Mr. Morton was an Investment Director of European American Securities, Inc.  He also worked at Chelverton Investments, New York and London from 1991-1996.  During 1987–1991, Mr. Morton was the Director of Corporate Finance at Samuel Montague Inc., New York.   In 1986, he served as Director of Business Development at Citicorp, New York.  In 1985, he was the Principal with Arthur Young in Milwaukee.  During 1979 – 1984, Mr. Morton worked as Manager at Bain and Company in Boston and London. Mr. Morton is registered with the U.K. Financial Services Authority. 22
  24. 24. 1 <ul><li>Further Information on the Company can be obtained at: </li></ul><ul><li>http://www.dragon-upd.com </li></ul><ul><li>including: </li></ul><ul><ul><li>a copy of the Admission Document published by the Company on 25 May 2007; </li></ul></ul><ul><ul><li>the Company’s interim results published on 17 September 2007; </li></ul></ul><ul><ul><li>other RNS public announcements made by the Company; and </li></ul></ul><ul><ul><li>Information on the Company’s share price. </li></ul></ul><ul><ul><ul><ul><ul><li>Please note that the Admission Document contains details of the rights attaching to the Company’s ordinary shares and a discussion of the risk factors which should be considered in evaluating whether to make an investment in the Company. </li></ul></ul></ul></ul></ul>Further Information 23
  25. 25. 1 T HANK Y OU! Enquiries regarding this presentation should be directed to the following: Chris Kamtsios Senior Partner - Managing Director Dragon Capital Partners Tel: (+380 44) 490-7120 Mob: (+380 50) 469-6913 [email_address] Eugene Baranov Junior Partner Dragon Capital Partners Tel: (+380 44) 490-7120 Mob:(+380 50) 469-7576 b [email_address] Contacts 24

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