The public offering of shares of Griffin Premium RE will include up to 22,201,267 new shares and up to 59,108,251 shares sold by existing shareholders Griffin Netherlands II B.V. and GT Netherlands III B.V — entities indirectly controlled by the global investment fund Oaktree Capital Group LLC (“Sale Shares”). Additionally, the Selling Shareholders have agreed to sell up to 7,857,705 existing ordinary shares pursuant to the over-allotment option (“Greenshoe Shares”). Before the end of the book-building, the existing shareholders may decide to increase the number of sale shares by a maximum of 26,786,383 shares (“UpsizeOption”).
The offering is directed to institutional and retail investors in Poland. The Company’s shares will also be offered to selected foreign institutional investors (outside the United States) in a private placement as defined in Regulation S under the US Securities Act of 1933. It is anticipated that about 20% of the total number of shares included in the offering will be allocated to retail investors.
Based on the maximum price and assuming gross primary proceeds of approximately €29.3 million (PLN 126.5 million), full placement of the sale shares and full exercise of the over-allotment option, the total offer volume is valued at approximately €130 million (PLN 562 million) to ca. €171 million (PLN 736 million) (incl. Upsize Option).
Depending on the exercise of the greenshoe option and the upsize option, the free-float is expected to amount to between 51.2 percent and 74.3 percent post IPO.
The Selling Shareholders are subject to 365 days lock-up, and the non-executive directors of the company have committed to a lock-up period of 730 days starting on the first day of trading. Furthermore, the Company will not issue or sell any further shares for a period of 270 days after the IPO.
Maximum price and offer price
Subscription orders from retail investors will be accepted at the maximum price, which has been set at PLN 6.50 per share. The final price and number of offer shares will be determined after book-building among institutional investors and published by 29 March 2017 at 9:00 am at the latest. The final price will be the same for new shares and shares sold by existing shareholders.
Subscriptions and allotment of shares
Under the expected timetable of the Offering, subscription orders from retail investors will be accepted from 17 to 27 March 2017. Each subscription order may be for no less than20shares and no more than 4,500,000shares.
To facilitate participation in the Offering by retail investors, a retail syndicate has been formed includin gseven brokerages throughout Poland. To place a subscription order, it is necessary to hold an open investment account at any brokerage.
A list of members of the retail syndicate and a list of locations where subscriptions for the Company’s shares will be accepted will be published before commencement of subscriptions at the websites www.griffin-premium.comandwww.dmbzwbk.pl.
Book-building among institutional investors is planned for 15 to 28 March 2017, and subscriptions by investors in this category will be accepted from 29 to 31 March 2017.
The global coordinators and joint book runners are Bank Zachodni WBK S.A. and Joh. Berenberg, Gossler& Co. KG, while Dom Maklerski BOŚ S.A. is acting as co-lead manager.
The timetable for the Offering provides that shares will be allotted to investors on 3 April 2017. Trading in the Company’s shares on the Warsaw Stock Exchange is expected to commence on or about 13 April 2017.
Planned use of proceeds from the issue of new shares
Dorota Wysokińska-Kuzdra, CEO of Griffin Premium RE, commented: “Griffin Premium RE is the owner of attractive pure office and high-street mixed-use properties with a combined value of over €500 million. Under our strategy, we intend to expand our portfolio, among other things by further acquisitions of properties meeting strict criteria enabling the company’s shareholders to obtain an attractive and stable rate of return. We intend to finance these acquisitions among other sources from the issue of new shares. We have just concluded a preliminary agreement to acquire the West Link office building developed by Echo Investment in Wrocław. Its completion is planned for the 2nd quarter of 2018, and all available office space has already been pre-leased to Nokia for the lease term of seven years. We have also signed agreements with Echo Investment for investment of 25 percent in three office projects being carried out in Warsaw. The agreements also provide for the right of first offer to acquire the remaining 75 percent in these projects as of completion, i.e. in late 2018 or the 1sthalf of 2019. In the event of exercise of this option and inclusion of all four properties in our portfolio, we estimate today that the value of the portfolio will grow by over EUR 170 million.”
The company intends to raise net proceeds from the issuance of the new shares of approximately €28 million (i.e. about PLN 120 million), which will be invested in defined new assets. Of this, the Company intends to apply about €18 million to the purchase of the West Link project in Wrocław and to apply the remaining amount to investment participations (of 25 percent) in the Warsaw projects Beethovena I and II in the southern part of the Warsaw central business district and Browary located close to the city centre.
Forecasts for 2017
The forecasts of Griffin Premium RE for 2017 are for net operating income from the rental of the properties held by the Company to reach about €32.2 million. The company plans to pay out to shareholders in the form of a dividend about 65 percent of funds from operations (FFO). The value of FFO in 2017 is estimated at about €21.4 million, of which €17.4 million for the 2nd through 4th quarters of the year will be the basis for payment of the dividend. The annualised dividend yield for 2017 is estimated 6.5 percent, as calculated on the basis of the annualised value of FFO for the 2nd through 4th quarters of 2017 and the maximum price of offer shares.