Aristo, Dolphin sell Venus Rock Cyprus to HK investors for 290 mln

AIM-listed Dolphin Capital and Paphos-based Aristo Developers announced the sale for 290mln euros of all their joint interest in the Venus Rock Golf Resort project to an unnamed Hong Kong-based real estate investment group.
The government is expected to net a significant amount of the 9-13% value of the deal, or about 26-38 mln euros in taxes, agency commissions and other costs.
The project, which is designed to include two golf courses, the 5-star Nikki Beach Hotel, two community sports centres, a commercial and leisure component, as well as luxury private homes, was sold in a deal concluded on May 17.
Dolphin Capital Investors Ltd. said the deal comprises a fixed consideration of 241.5 mln euros and a conditional deferred consideration of 48.5 mln through it’s 49.8% subsidiaries Aristo Developers Ltd and Venus Rock Estates Ltd.
An amount of 15 mln euros from the deferred consideration is conditional upon the increase of the existing residential building capacity of the two golf phases of the Venus Rock project, expected to materialize soon as this measure has already been announced by the government and reported by the company on April 22.
The 33.5 mln balance is conditional upon the finalisation of the on-going rezoning of certain agricultural land plots included in the project within 12 months.
The sellers Dolphin Capital and Aristo have already received a non-refundable deposit of 2 mln and a further 10 mln is payable before June 30.
The remaining 229.5 mln fixed consideration will be paid in part within three months and the balance within six months, depending on the release of the existing mortgages over the Venus Rock project.
The mortgage-free titles of the Venus Rock properties will be transferred to the buyer upon payment.
The 48.5 mln euro conditional deferred consideration is payable within six or 12 months depending on the relevant conditions.
“This landmark transaction is in line with our strategic objectives for 2013 and has enormous benefits not only for Dolphin but also for the Cypriot economy in general”, said Miltos Kambourides, Managing Partner of Dolphin Capital Partners.
The deal is at a 22% discount to venus Rock’s latest valuation of 370 mln euros as at 31 December 2012 and will result in a decrease in Dolphin's net asset value (NAV) per share by 7.7% (from 90p to 83p) and 5.6% (from 81p to 76p) before and after deferred income tax liabilities (DITL).
Dolphin's 49.8% of the net purchase price will amount to about 117 mln.
An amount of 25 mln euros will be used to repay existing project loans, up to 103 mln will be used for the release of existing mortgages on the Venus Rock properties (related to other Aristo projects), an additional amount might be used in the further deleveraging of Aristo in order to free-up new land assets for sale, as well as for working capital purposes, and the remaining balance of the Purchase Price will be distributed to Theodoros Aristodemou and Dolphin on a prorated basis. Potential distributions to Dolphin would most likely range between 25 mln to 40 mln euros and could be utilised for working capital, project development, further acquisitions and share buy backs.
The deal is also expected to improve Aristo's sales capability and velocity by freeing up additional land and residential projects for sale; significantly reduce debt service expenses and improve Aristo's on-going profitability; and, enable the company to continue to build its market leadership in Cyprus.
Since its inception in 2005, Dolphin has raised 948 mln of equity, has become one of the largest private seafront landowners in Greece and Cyprus and has partnered with leading architects, golf course designers and hotel operators.
Dolphin's portfolio includes 14 large-scale, leisure-integrated residential resorts under development in Greece, Cyprus, Croatia, Turkey, the Dominican Republic and Panama and a 49.8% strategic participation in Aristo Developers Ltd.