ECM Real Estate Investments A.G. ('ECM') has expanded its investment portfolio through the acquisition of a retail shopping center under development in China via forward purchase, as well as an option to acquire an adjacent office building currently under development. Both properties are part of a multi-functional development project in Zhongguancun Zone, Beijing's 'Silicon Valley'.
Globe Plaza, Beijing.
The multi-use development project includes a five-star hotel, serviced apartments, an office building and a retail shopping center. The whole project has a total gross floor area of approximately 192,000 m².
The retail shopping center 'Globe Plaza' and office building 'Metropolis Tower' comprises of approximately 77,000 m² and 35,500 m² of gross floor area, respectively, and together offer a total of 450 parking lots. The site will be developed jointly with Beijing Science Park Development Co., Ltd. ('BSPD') who has already committed to the development and construction of the Zhongguancun Science Park. It is expected that BSPD will retain ownership of the hotel and serviced apartments.
Commenting on the acquisitions, Milan Janku, ECM's President and Chairman of the Board, said, "We are very pleased to have brought the Globe Plaza and an option for the Metropolis Tower into ECM's investment portfolio. In our view these two investment projects, with an expected blended IRR of 25%, represent an excellent opportunity to participate in a high growth Chinese market. This acquisition creates great value for the company's shareholders whilst keeping potential risks under control, given the advanced stage of the project. The project is yet another confirmation of ECM's ability to generate interesting business opportunities in new areas and regions."
The total project cost of the Globe Plaza shopping center including fit-out, marketing and other costs is US $160 million (€119m) and the equity component is targeted to approximately 25%, with the remainder being leveraged through mezzanine and senior funding.
"ECM is very pleased with the overall progress of both projects: all necessary approvals have been secured and the construction of both properties to be acquired by ECM has been progressing rapidly. The Globe Plaza shopping center is scheduled for shell and core completion and mechanical equipment in May 2008 with its Grand Opening by January 2009. The project has a market value based on an external independent appraisal of approximately US $220 million (€163m)," comments Maros Breda, General Manager of ECM China.
The Metropolis Tower office project is scheduled for final completion and a Grand Opening in May 2009. ECM's option to acquire the Metropolis Tower project will expire in late October 2007.