Shares digital

Eastern European Property Fund (EEP:AIM) – Interims PTP: £0.6m (-£0.04m) Divi:n/a (n/a)

Rather than completing any new property acquisitions during the six-month period, the property fund chose to use its cash to maximise the value of its existing properties, through further refurbishment.

As a result of this strategy, the fair value of the group’s properties has increased by £2.1 million, an uplift of £1.4 million during the period, when taking costs and foreign exchange movements into account.

The two Turkish subsidiaries recently secured two loan facilities with HSBC (HSBA) worth $17.5 million, to be repaid after five years, in a bid to make the most of the strong property market in Turkey.

Although the company’s share price has been impacted by recent market turmoil, falling 2.5p during the period ending 30 September 2007, the Bulgarian, Romanian and Turkish property markets have not followed the same downturn as the UK property market. At the end of the period, 82% of the group’s refurbished property had been let, and rent levels and property prices have continued to grow in all countries on which the group focuses.

The group has looked into a number of possible acquisitions in Kiev in Ukraine, but did not complete any purchases during the period due to the belief that the overall level of return achievable was insufficient.

Looking forward, the company is considering several acquisitions in Turkey, Bucharest and Romania. However, some of these acquisitions may require further funding over and above borrowing limits within the existing portfolio, something the group is currently looking into. The shares remained flat at 94p following the results.

Shares says: Solid investment opportunities remain in Turkey, Bulgaria and Romania.

by: Rachel Robson