Dawnay, Day Carpathian PLC (DDC) has acquired a multi-purpose development site for €14.3 million in Cluj-Napoca, Romania (the 'Cluj Transaction'). This acquisition is the first of the pipeline deals identified by the Company's asset manager, Dawnay, Day PanTerra Limited (the 'Property Advisor') at the time of the second fund raising completed in May 2007.
The Cluj-Napoca development is located in the city center and covers a total site area of 19,400 m². The planned development of over 40,000 m² will be a retail and entertainment complex with an office element of over 8,000 m² included, with the potential to incorporate a hotel. Cluj-Napoca is one of the largest cities in Romania, situated approximately 440 km north-west of Bucharest, in the Somesul Mic Valley, in the historic province of Transylvania. With nearly 300,000 inhabitants Cluj-Napoca is best known for its important academic, cultural and industrial centers.
The site is located in the center of the town on one of the main arterial roads through the city which connects the Eastern districts to the city center; attracting a high volume of traffic during the day. The site is acquired with a consented building permit, and construction is expected to commence in March 2008. The estimated cost of construction is €60 million and the project is expected to be completed within approximately 18 months. Based on an income yield of 7%, this puts the estimated project value upon completion at €111 million.
The acquisition is a share purchase transaction from a Dutch holding company in which members of the Dawnay, Day Group have a controlling interest and represents the Company's second investment in Romania and the fourteenth transaction overall. The company has been purchased with financing, on a 65% loan to value basis, arranged by the Property Advisor and this debt shall be refinanced with a construction loan when the project commences next year. The leasing of the space, arranged through S.C. Cushman & Wakefield Consulting Activ S.R.L., is well under way.
Under the original terms set out at the time of the Company's IPO, following the acquisition, members of the Dawnay, Day Group have agreed to subscribe for an estimated €1.5 million of new ordinary shares in DDC, representing profits from the Cluj Transaction.
Commenting on the acquisition, Rupert Cottrell, Chairman of Dawnay, Day Carpathian PLC, said, "This represents an excellent transaction for DDC and an opportunity for us to establish ourselves further in the Romanian market through the first of a number of development projects. We feel that the country as a whole benefits from strong growth potential but with a lack of good retail stock. The combination of these factors fully supports development opportunities such as this."
Source: Cardew Group