HGA Capital Grundbesitz und Anlage GmbH begins selling shares in its third closed-end real estate fund investing in Hungary. The Fund will invest in a total of five office buildings, of which two are historical buildings on boulevard Andrássy út in the center of Budapest. The three other buildings form part of the Infopark directly adjacent to Budapest's universities, which are located close to the city center. Each of the buildings has been part-leased to several tenants. The occupancy rate averages 96%. This purchase makes HGA Capital one of the biggest landlords in Budapest.
The fund is €121.5 million in size, of which €49.5 million is shareholders equity. The projected distribution comes to 6.75% p.a. Investments in the fund start at €10,000 plus a premium of 5%.
The two buildings on Andrássy út are protected as historical and are a UNESCO World Heritage Site. They were extensively modernized in 2001 and 2002. Tenants include Budapest Bank, the ARAG insurance company and the renowned international law firm White & Case.
The three buildings immediately adjacent to Budapest University form part of Infopark, which was designed for tenants in the IT, telecommunications and software-development sectors. The buildings, which were completed between 2002 and 2005, have been leased to international corporations, such as Hewlett Packard, T-Systems, T-Online, Epson, Daewoo and Nissan, and to NKTH, the Hungarian Research and Technology Office. All leases are on a euro basis.
The C Building, completed in 2005, has already received two awards: it was the winner of the Best Office Development Awards of the Construction & Investment Journal and was also nominated the "Real Estate Project of the Year 2005" by journalists in the field.
We are increasing our commitment to the Hungarian market as the potential of this fast-growing new EU member is far from having been exhausted, said Dr. Joachim Seeler, managing director of HGA Capital. The success of our other two Central European funds, HGA/Central Europe I and HGA/Central Europe IV, both of which also invest in Hungary, is proving us right. To illustrate, investors in HGA/Central Europe I last year received a special payout of 0.5%. Funds invested in Hungary benefit from the countrys very low corporate tax rate of 16%.
Thanks to the way the HGA/Central Europe V Fund is set up, between 2007 and 2021 the average payout after tax will come to more than 97% of the payout before corporate taxes.
The five individual properties and the portfolio as a whole have been awarded a very good (A)" rating from Europe's leading rating agency, Feri Rating & Research GmbH.