Orco Property Group makes new major acquisition (DE)

Orco Property Group has announced the acquisition of Viterra Development, a property development company based in Essen, Germany. Viterra Development, previously owned by Deutsche Annington, has been acquired by Orco Property Groups German subsidiary, ORCO Germany. Total value of the transaction including the assumption of debt and the takeover of a number of properties is approximately €100 million and will be completed subject to Polish merger approval.

Viterra Development is one of the select few leading commercial and residential property developers and investors operating across both Germany and Central Europe. The companys activities include a number of large-scale developments and investments in the core German markets of Berlin, Dusseldorf, Frankfurt, Hamburg and Munich, as well as the Central European growth markets of Prague and Warsaw. Viterra Development has a skilled workforce of highly qualified employees and an excellent network of contacts and counterparties in the German property market.

At the heart of the Viterra Development transaction are a number of existing commercial properties throughout Germany and Central Europe: one each in Berlin and Köln and two in Düsseldorf (total 27 000 m); seven commercial projects are currently under development, including two in the Czech Republic - one of them being a major logistics park in Prague. Other major commercial developments within the Viterra Development portfolio include: projects in prime locations in Berlin, Munich, Essen and Duisburg (with approx. 80 000 sqm - with pre-lease already exceeding 50% at the beginning of construction). The company also have three further options for major flagship development projects in Berlin, Düsseldorf and Essen - over 100 000 sqm in total.

Viterra Development also have nine residential projects in the upper / middle class segment under construction in Munich, Hamburg and Frankfurt: a total of 420 apartments. Four additional projects in Warsaw, comprising of 400 apartments, will enable Orco Property Group to double its Warsaw exposure and become one of the largest residential developers in the Polish capital. Finally, the company also has a landbank for residential development in Munich of approximately 12,000m . All projects under construction are pre-sold at 50-70% level.

This acquisition of Viterra Development is consistent with Orco Property Groups Mittel Europa strategy, which has been on-going since 1991: diversifying on price attractive markets that have been under-supplied or stagnating for years and finding windows to acquire projects with large upside potential. With this current acquisition, Orco Property Group has managed to acquire a company that is complimentary with its own strategy. This acquisition strategy is consistent with the previous successful acquisition and integration of IPB Real (at the time, the largest residential developer in the Czech Republic) in 2003 by Orco Property Group.

Orco Property Group will acquire a team of 70 professionals in Germany with a proven track record, a team of 19 in Warsaw, and 4 in Prague, which will now be integrated into the local Orco Property Group teams.

The acquisition of Viterra Development will be relutive and bring positive cash flow to Orco Property Group. Potentially, it will contribute €60 to 80 million turnover per year from 2006 onwards and €130 million in cash flow over the next 3 years.

Source: Orco Property Group

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