Plaza Centers N.V. has executed a binding agreement for the sale of its Arena Plaza shopping and entertainment center in Budapest to UK based Active Asset Investment Management ('aAIM'), one of the UK's fastest growing commercial property investment groups. In September 2006, aAIM launched a £2-billion acquisition programme for its European Symmetry Fund in partnership with Bank of Scotland. The estimated consideration for the acquisition of the Arena Plaza shopping and entertainment center is approx. €400 million.
The purchase price will be finally determined on the completion of the transaction, which is expected to take place within a month of Arena Plaza's opening date, on the basis of the actual rent levels achieved being capitalized at an agreed yield. Plaza Centers will remain responsible for the letting of the center's remaining units for a period of up to one year following the closing, and is anticipated to benefit from further price adjustments reflecting the signing of any additional leases during the two consecutive earn-out periods, which end three months and 12 months respectively following the completion.
The Company's management estimates the final transaction price based on actual rent levels will be no less than circa €380 million, with an overall transaction price cap of €400 million, as agreed with aAIM. The final expected transaction price represents a significant upside comparing to the project's estimated value upon completion at the time of the Company's Admission to trading in November 2006, which was circa €333 million.
Designed and developed by Plaza Centers following the acquisition of this landmark site by the Company in late 2005, Arena Plaza is Hungary's largest shopping and entertainment center. It comprises 220 stores located throughout approximately 66,000 m² of lettable area and is serviced by over 2,800 parking spaces. The center is scheduled to open in the fourth quarter of 2007 whereupon, subject to the fulfilment of certain conditions, the transaction will be completed. Amongst the international anchor tenants of the center are Tesco, the Inditex Group and Peek & Cloppenburg, together with other major retailers such as H&M, Electro World, Hervis and C&A. Additionally, Arena Plaza will accommodate a 23-screen Cinema City complex, which includes Hungary's first IMAX theatre. The centre is currently over 85% pre-let.
The profit from the sale will be recognised mainly over 2007 with adjustments in 2008 and, in part, distributed in accordance with the Company's dividend policy, announced following its successful listing on the London Stock Exchange last November.
Commenting on the sale, Ran Shtarkman, Chief Executive of Plaza Centers, said, "Arena Plaza is one of the largest and most prestigious shopping and entertainment centers in Central and Eastern Europe, the design and ambition of which has set new standards for the region ever since we first acquired the site in late 2005. In developing Hungary's largest shopping center, we have provided an exciting new commercial center for Budapest and a compelling destination for national and international tenants and visitors. Upon completion, the project will represent our 25th shopping and entertainment center in the region and our 17th shopping and entertainment center in Hungary. In addition, we have fifteen other projects in our pipeline in different stages of development.
"The Arena Plaza confirms Budapest's position among the major and diverse cities in Europe and has been a significant example of Plaza's mega, strategic development projects, such as the large gambling and leisure resort on Dream Island in Budapest and the Casa Radio landmark scheme in the heart of Bucharest which comprises more than 500,000 m² of build area, including one of the biggest shopping and entertainment centers in the region, residential and office space, a hotel, casino, hypermarket, convention and conference hall and parking facilities.
"The sale of Arena Plaza demonstrates our ability to act dec