DTZ closes the largest office investment transaction in Romania (RO)

DTZ have announced that their client Europolis Real Estate Asset Management GmbH has made yet another major acquisition on the Bucharest real estate market. The Austrian Asset Manager has forward purchased the first phase of the Sema Parc development, closing the largest ever office investment transaction in Romania to date, with an estimated lot size of approximately €90 million.

"The redevelopment of the former 43 hectare industrial facility Semanatoarea, has started in August, the first phase consisting of two office buildings and comprising 42,000 m² of rentable area," stated Tim Wilkinson, Managing Director of DTZ Echinox. "The Courtyard building is the first to be completed by the end of 2007, and will provide almost 15,000 m² of net rentable area with a business park concept, while the City building is to be completed by mid-2008 and will provide almost 27,000 m² of A-class office space arranged in a 15-story building with an impressive design. About 700 parking places for the entire first phase development will be arranged in the 2-level basement, which is a parking ratio well above the market average" added Wilkinson.

Doug Hardman, Regional Investment Director with DTZ CEE office, says "DTZ have assembled a cross-border team to undertake this task, actively involving our local office in Bucharest, as well as the regional office in Budapest."

The investment market is the youngest real estate sub-market in Romania, starting in Autumn 2003 with 2 institutional acquisitions, Europe House also purchased by Europolis with DTZ's advice and Opera Center purchased by CA Immo. The yields at the time were 12.5-13%. Since then, the yields have dropped significantly towards 7% within 3 years, the highest yield compression seen so far in CEE countries. The catalyst for this unprecedented yield compression has been the strong interest from foreign investors in the Romanian market, combined with a lack of investment grade product suiting their criteria.

Therefore, many institutional investors in order to secure high quality product have looked towards forward purchase transactions offering a clear exit to the developers, in return for more competitive yields. Following their first acquisition in Romania, $30M for Europe House (Q4/2003), Europolis have consolidated their portfolio with the forward purchase of CEFIN Logistics Park (Q3/2004), amounting up to €140 million, and the recent forward purchase of Sema Parc Phase I (Q4/2006), estimated at 90 million.

Doug Hardman, Regional Investment Director within DTZ CEE office, has stated: "We are confident that the latest major acquisition on the Bucharest market consolidates even further our strong relationship with our client Europolis."

Europolis is delighted in having finally secured the deal together with DTZ. As long term Investor and Asset Manager the two buildings fulfill our high requirements in terms of location and quality of the product, said Helmut Neubauer, responsible Portfolio Manager of Europolis for Romania.

According to the DTZ specialists, the investment market in Romania for 2006 is estimated at €800 million, which means an increase (currently) of 400% from 2005. However, the Romanian investment market is still some way behind other more mature markets in the region.

"We are happy to be, for the third time in four consecutive years, the market leaders on the investment market," stated Wilkinson. "We expect to have advised our clients on transactions totalling over €200 million by the end of the year, concluded Tim Wilkinson, Managing Director of DTZ Echinox.

Source: DTZ

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